MPs back benefit boost for 66-year-olds as state pension age increases | Personal Finance | Finance

A committee of MPs has called on the Government to consider increasing universal credit for 66-year-olds to help prevent financial hardship caused by the “lottery of life” as the state’s retirement age rises. The State Pension age in the UK is gradually rising from 66 to 67. This change is being phased in for anyone born on or after April 6, 1960. If you were born between April 1960 and March 1961, your retirement age will be 66 and a certain number of months. The State Pension age is officially 67 for those born on or after 6 March 1961.

The Work and Pensions Committee has said it supports the Government’s calls to increase universal credit for 66-year-olds. Universal credit is a means-tested social assistance payment for people of working age who are on low incomes, unemployed or unable to work. The committee said ministers should consult on the change, with a view to introducing it by the end of the year as an interim measure to allow time for longer-term support to be developed.

The committee said there was evidence that waiting longer for the State Pension would “harm” some 66-year-olds who may not be able to continue working until they are 67. The committee warned that a growing number of 66-year-olds may have to rely on the standard universal credit rate of around £425 a month for longer, despite their deteriorating health.

The report said: “For many, this will be a year of hardship, with working age benefits falling short and potentially depleting the savings they rely on to support themselves in retirement.”

He added: “On balance, we support increasing universal credit (UC) for all recipients in the year before state pension age because this has a greater impact on reducing poverty and hardship.

“We propose it as a short-term approach to mitigate the impact of the increase to 67 that has already begun. We propose to use UC on the basis that it allows support to be provided quickly.”

“We recognize that the impact on work incentives has been considered. However, the proposal is for a modest increase in support in the year before the state pension age. Those who are out of the labor market at this point in their lives are unlikely to return to the labor market.”

Low earners can claim pension credits, but only once they reach state pension age, which the committee argues leaves many pre-retirees dependent on savings intended for retirement, especially those with health problems, caring responsibilities or physically demanding jobs.

MPs also highlighted regional inequalities, saying health problems and disability were more common in deprived areas where employment opportunities may be limited.

“The effects of the rise to 67 will be very uneven. For many people who cannot continue to work, particularly in low-income and poorest areas, this will mean hardship as they wait longer for the state pension.

“Their shorter life expectancy means they can expect to receive this benefit for a shorter period of time than those in the least deprived areas.

“We know that the recent increase (from 65 to 66) has caused absolute poverty rates among 65-year-olds to more than double.”

Committee chair Debbie Abrahams said: “We cannot allow people who are already struggling as they approach retirement age to be forced to choose between continuing to work while their health is poor or prolonging their poverty while they wait for the state pension to start.

“This is not the afterlife anyone wants or wants to see their loved ones endure after decades of getting by. We must recognize that pre-retirees have greater needs and face greater barriers to employment due to health problems, ageism and lack of opportunity to develop skills.”

“More than half of people are not in paid work by their mid-60s and are unlikely to receive this if they are effectively written off. Additional social security payments are crucial to reduce the combined effects of the life lottery and the state pension age rise.”

Andrea Barry, deputy director of operations at the Center for Better Aging, said: “What is recommended by the committee is a short-term measure to alleviate the current problem.

“In the longer term, and well before any future state pension increases, we need the Government to take a common approach to pensions, work, benefits and health to ensure that the mid-60s do not become a period of increasing financial insecurity for growing numbers of older people.

“This will require ongoing reforms to employment and skills support to be designed with the needs of older people in mind, as well as providing improved career guidance and financial planning advice for older workers and stronger support for those living with health conditions.”

Caroline Abrahams, charity director at Age UK, said: “We are pleased that the select committee recognized that too many people approaching state pension age find themselves in a very difficult financial situation.

“Allowing people who will actually never work again to struggle to make ends meet until they reach state pension age is a pointless waste and is an issue we have been highlighting for years, so it is great that the committee strongly recommends the Government address this issue and do so as soon as possible.”

A Department for Work and Pensions (DWP) spokesman said: “We welcome the Work and Pensions Select Committee’s investigation into the move to the state pension age and will consider its reports and recommendations in due course.

“As of February 2026, just 0.02% of the universal credit caseload were aged 65 or 66.

“As the Pensions Commission examines how we can ensure secure retirements for tomorrow’s retirees, a range of extra support options are available for those who have not reached state pension age, such as universal credit and other means-tested and disability-related benefits.”