The Government has been told to look into a universal credit for 66-year-olds affected by the “lottery of life”. With the state pension age expected to rise to 67, a committee of MPs has called on a financial buffer for those affected. The Work and Pensions Committee said it is backing calls for the Government to increase the universal credit score for 66-year-olds.
It said 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. The report said: “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 report adds: “On balance we support increasing the level of universal credit (UC) for all recipients in the year before state pension age because it has a greater impact in reducing poverty and hardship.
“We recommend it as a short-term approach, to mitigate the impact of the increase to 67, which has already started. We propose using UC on the basis that it should enable support to be provided quickly.
“We recognise that the impact on work incentives is a consideration. However, the proposal is for a modest increase in support in the year before state pension age. Those out of the labour market at this point in their lives are very unlikely to return to it.”
People on low incomes can apply for pension credit – but this support is only available once people have reached state pension age. The report has also warned of an “uneven” experience because of the state pension age increase.
It adds: “The impacts of the rise to 67 will be very uneven. For many unable to keep working, particularly on low incomes and in the most deprived areas, it will mean hardship as they wait longer for a state pension.
“Their shorter life expectancy means that they can then expect to receive it for a shorter time than those in the least deprived areas. We know that the last increase – from 65 to 66 – resulted in absolute poverty rates among 65-year-olds more than doubling.”
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.
“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.”
