The Department for Work and Pensions (DWP) is preparing to raise the state pension age, which could delay payments worth up to £16,500 a year for individuals currently aged between 49 and 55. Treasury officials have informed the Office for Budget Responsibility (OBR) that the increase in retirement age is expected to be brought forward by at least seven years, to 2037.
Current State Pension Age and Planned Changes
Currently, the state pension age is 66 for both men and women. It is scheduled to rise to 67 by 2028 and to 68 by 2044, affecting those born after April 1977. However, the new proposal would accelerate the timeline, impacting people born between April 1970 and March 1978.
The single-tier state pension, introduced for those retiring after April 6, 2016, offers a maximum payment of £241.30 per week in 2026/27, equating to £12,547.60 annually. Experts suggest it could be worth as much as £16,500 per year by 2037.
Impact on Those Aged 49 to 55
Individuals currently aged 49 to 55 would need to work an additional year before receiving their state pension, potentially forfeiting £12,547 under current rates. By 2037, the lost income could amount to £16,500 annually if the triple lock guarantee continues.
To qualify for the full state pension, individuals must have 35 years of National Insurance Contributions, with a minimum of ten qualifying years required for any payment.
Expert Advice on Preparation
Pensions expert Rachel Vahey commented: "If the increase is brought forward, people born between April 1970 and March 1978 would need to think about how they could cover the gap in income this higher state pension age causes." She added: "By 2037, if the state pension rises each year by the minimum promised under the triple lock, it could be worth around £16,500 a year. That is a significant amount of income to go without, even if the delay is only for a few months."
Vahey advised: "Some people may want to work for longer until their state pension kicks in. Others might want to prioritise private pension saving now to make up that gap. But the key is being prepared, knowing what your state pension age is, and keeping up to date with any changes."
