The Office for Budget Responsibility (OBR) has warned in its latest Fiscal Risks and Sustainability Report that the Government's current policy is to raise the state pension age to 68 between 2037 and 2039, seven years earlier than the existing legislative timetable of 2044-2046. This change could affect around five million people aged between 49 and 55, potentially forcing them to wait an extra year before receiving their state pension.
Potential Financial Impact
If the change is introduced, those affected could miss out on at least £12,500 in state pension payments in today's money. Hargreaves Lansdown estimates that, assuming the state pension rises by the minimum 2.5% each year under the triple lock, the value of that lost year could reach around £16,500. While the Treasury insists the law still states the pension age will rise to 68 between 2044 and 2046, experts are urging workers to prepare now in case the timetable changes.
Step 1: Increase Your Workplace Pension Contributions
Boosting contributions to a workplace pension is one of the most effective ways to offset any future shortfall. Employees receive contributions from their employer, while pension payments also benefit from tax relief. Hargreaves Lansdown estimates a 49-year-old earning £30,000 who increases pension contributions from the minimum level, with employer matching, could build tens of thousands of pounds more by 2037 than someone sticking with minimum payments.
Step 2: Build an Emergency Savings Fund First
Before increasing pension contributions, experts recommend having enough easily accessible savings to cover between three and six months' worth of essential living costs. An emergency fund can provide financial security if unexpected expenses arise before retirement.
Step 3: Cut Household Costs and Save the Difference
Checking for energy account credit, reviewing monthly subscriptions and using budgeting apps can all help free up extra cash. Some households paying energy bills by direct debit may have built up credit on their accounts, while banking apps offering 'round-up' savings features can also help grow savings with little effort.
Step 4: Make the Most of Tax-Free ISAs
Individual Savings Accounts (ISAs) allow savers to earn interest or investment returns free from UK tax, with up to £20,000 able to be deposited each tax year. For those balancing retirement planning with shorter-term goals, ISAs can provide greater flexibility than pensions while helping build additional savings.
Criticism and Official Response
The potential pension age changes have attracted criticism from campaign groups, who warn they could disproportionately affect lower-income households. Dr Carole Easton, chief executive of the Centre for Ageing Better, described the prospect of bringing forward the rise as 'extremely worrying', arguing many people already struggle financially while waiting to reach state pension age. However, a Treasury spokesperson said: 'The law remains to increase the state pension age to 68 in 2044. In July 2025 we announced the launch of the third review of the state pension age, as required by legislation.' While no changes have been confirmed, financial experts say reviewing retirement plans now could leave savers better prepared should the timetable change.
