Millions of workers in their early 50s could face a potential state pension blow, with experts cautioning that thousands of pounds each could be lost if the Government proceeds with its plan to raise the retirement age. The Department for Work and Pensions (DWP) is contemplating whether to accelerate the increase in the state pension age from 67 to 68, a shift that could particularly affect those born between 1971 and 1973.
New calculations by Rathbones, one of the UK’s leading wealth managers, suggest that those impacted could lose a full year’s worth of state pension – totalling up to as much as £17,774 – if the changes are implemented five years earlier than currently planned.
Under current legislation, the pension age is due to rise to 67 by April 2028 and to 68 between 2044 and 2046. However, the Government’s new review – expected to report in 2029 – might bring forward that increase to as early as 2039.
If this happens, individuals aged 51 to 53 today could be among the first to feel the impact. The losses could range from £15,798 to £17,774, depending on the future rate of state pension increases.
These figures, based on either a 2% inflation-linked increase or the so-called triple lock – which guarantees the state pension rises by the highest of earnings, inflation or 2.5%.
Rebecca Williams, Divisional Lead of Financial Planning at Rathbones, said: « With longevity increasing and population pressures mounting, future generations appear set to face a less generous state pension regime than that enjoyed by many of today’s retirees. The situation appears particularly precarious for those in their early 50s who face the real prospect of missing out. »
She further highlighted the concerns of those approaching retirement age: « We’ve seen a number of people in their late 40s and early 50s come to us seeking greater clarity on their retirement prospects. With shifting goalposts in the pension landscape, many are understandably keen to ensure they’re on track to retire comfortably and on their own terms. »
Williams also stressed the inadequacy of relying solely on the state pension for a comfortable retirement: « The state pension alone is not enough for a comfortable retirement. People need a broad foundation built on workplace pensions, private savings, and the ongoing support of pension tax relief. Cracks are beginning to show in the system, and they must be addressed urgently if we are to maintain faith in the UK’s pension framework and ensure people are equipped not just to survive, but to thrive in later life. »
This stark warning comes as the Department for Work and Pensions (DWP) revives the Pensions Commission, nearly two decades after its original report, to tackle the growing challenge of pension inadequacy.
Charlotte Kennedy, Chartered Financial Planner at Rathbones, has voiced her concerns about the future of retirement planning: « With pension arrangements offering a guaranteed income for life going the way of the dodo, the onus is increasingly on people to accumulate a nest egg that enables them not just to survive, but to thrive in retirement – with sufficient resources set aside to cover the cost of care. »
She also highlighted the shortcomings of current savings schemes: « While auto-enrolment has helped many build retirement savings with minimal friction, most savers remain far behind what is needed for a comfortable retirement. Efforts to bolster pension adequacy are welcome, but it’s important that new measures address the complex barriers preventing people from saving enough. »
Kennedy emphasised the need for inclusivity and education in financial planning: « The self-employed must not be left out. For business owners, pensions often take a back seat to the demands of growing a business. Financial education is also essential. It remains a minor part of the curriculum, typically folded into maths or PSHE. This must change. »
She advocates for early financial literacy: « The earlier young people learn how pensions work, the more likely they are to start saving early and feel empowered to make informed financial decisions. »
The triple lock policy, which has significantly improved pensioner incomes since its introduction in 2010, faces an uncertain future with the Institute for Fiscal Studies projecting it could cost £40 billion a year by 2050.
Campaigners insist that if there are to be any changes to the pension age or its benefits, it is crucial that the Government provides clear, advanced notice. They emphasise the need to prevent a recurrence of the WASPI fiasco, where thousands of women found themselves grappling with delayed retirement due to inadequate warning.
