The Work and Pensions Committee has urged the Government to introduce a universal credit increase for 66-year-olds as a temporary measure to mitigate the impact of the state pension age rising to 67. The committee's report warns that many individuals will face a year of hardship on inadequate working-age benefits, potentially depleting savings meant for retirement.
Committee Backs Universal Credit Boost for Pre-Pensioners
The report states: "For many, this will be a year of hardship, on inadequate working age benefits, potentially depleting savings they were relying on to support them in retirement." The committee supports increasing universal credit for all recipients in the year before state pension age, arguing it has a greater impact on reducing poverty and hardship. It recommends this as a short-term approach to mitigate the increase to 67, which has already begun.
Impact of State Pension Age Increase Uneven
The report highlights that the impacts of the rise to 67 will be very uneven. For many unable to keep working, particularly those on low incomes and in deprived areas, it will mean hardship as they wait longer for a state pension. Their shorter life expectancy means they can expect to receive it for a shorter time than those in less deprived areas. The committee notes that the last increase from 65 to 66 resulted in absolute poverty rates among 65-year-olds more than doubling.
Call for Consultation and Implementation by End of 2026
The committee says ministers should consult on the change with a view to putting it in place by the end of 2026 as a temporary measure, allowing time to develop longer-term support. Committee chairwoman Debbie Abrahams said: "We can’t just allow people who are already struggling as they approach pension age to be forced to choose between continuing work in poor health or prolonging their poverty as they wait for their state pension to kick in."
Pre-Pensioners Face Greater Barriers to Employment
Abrahams added: "This is not the later life that anyone wants or to see their loved ones endure after providing for decades. We should recognise that pre-pensioners have greater needs and greater barriers into employment due to ill-health, age discrimination, lack of opportunity to upskill. More than half of people are not in paid work in their mid-60s, and they’re not likely to get it if they’ve been effectively written off."
Current Support Only Available After State Pension Age
Currently, people on low incomes can apply for pension credit, but this support is only available once they have reached state pension age. The committee's proposal would provide a financial buffer for 66-year-olds who are affected by the lottery of life, ensuring they do not fall into poverty while waiting for their state pension.
