As the population ages, the proportion of people who are retired is growing, and with it the cost to the government of state benefits paid to older people. The overall welfare bill is rising – almost half of that bill is spent on people over 65. So, successive governments have raised the state pension age (SPA). The latest rise began in April, and it will reach 67 for everyone by next spring. However, this affects different people very differently, and parliament’s Work and Pensions Committee has just published a report on the consequences of the rise.
The committee believes that the change will risk intensifying poverty, ill health and inequality between regions, unless the government provides additional support during the transition. It argues that extending working lives is unrealistic for many people who have already left work because of ill health, disability or caring responsibilities.
The proportion of the population aged over 65 is set to rise from 19% in 2025 to 24% by 2050 and 28% by 2075. As a result, the Office for Budget Responsibility expects the cost of the State Pension will rise from around 5% of GDP today to 7.7% in the early 2070s. The committee recognises that this problem needs to be addressed, but is concerned that the solution must also be fair and protect people from poverty.
What is the state pension for?
The committee argues that the government has not clearly defined what the state pension is intended to achieve. Although it is described officially as a foundation for private pension saving, the full annual rate of £12,548 a year is below the estimated minimum retirement living standard for a single person outside London (£13,900 a year), and below the official definition of relative poverty. And many people receive less than the full amount, with those on low incomes especially dependent on state benefits. The committee therefore recommends that pension policy should begin with a clear definition of adequacy, based on living standards and the resources available to pensioners across the income distribution.
Declining health and employment prospects
The committee is also concerned that the increase to 67 coincides with worsening health and employment prospects among older workers. Although employment among people aged 60–64 has risen substantially over recent decades, employment falls sharply as people approach pension age: in 2025, only 42% of 65-year-olds and 29% of 66-year-olds were employed. The reasons differ by wealth: better-off people may leave work because they can afford to retire, while poorer people are more likely to leave because of ill health.
Health inequalities are particularly important. The proportion of people aged 60–64 reporting a work-limiting health condition increased from 28% in 2014 to 31% in 2024. Healthy life expectancy has also fallen, with large differences between areas. In the East of England region, people in Central Bedfordshire can expect to live to around 67 in good health, while in Peterborough, the figure is 55.
In the poorest fifth of the population, nearly half of all people aged 60–66 are already classified as frail. So, delaying the state pension will force some people to spend longer on inadequate working-age benefits, draw down savings prematurely or continue working despite serious health problems.
Multiple disadvantages
The report emphasises the effect of multiple disadvantages. Carers, disabled people, people with long-term conditions, women, some ethnic-minority groups and residents in deprived areas, are all less likely to have secure employment, good health, home ownership or adequate private pensions. Among those who do have private defined-contribution pension pots, women’s are much smaller than men’s. Almost half of carers aged 60–65 have no private pension savings, and carers who do have savings hold much less than the UK average.
These patterns mean that people who are least able to absorb a delayed pension are most likely to be affected by it.
Urgent action
The committee notes that, after the previous SPA increase, from 65 to 66, the poverty rate among 65-year-olds doubled, and it criticises the government for not commissioning an up-to-date assessment before the latest rise began. The government plans to evaluate the policy only after the increase is complete in 2028, leaving it too late for effective mitigation.
The report calls for immediate intervention, by increasing Universal Credit for people in the year before state pension age. This would cost around £600 million annually: a small sum compared with estimated savings of £10.5bn a year from the overall rise to 67.
Although the committee recognises possible concerns about incentives to work, it considers that preventing poverty and hardship is more important than any disincentive to stay longer in work, which would in any case, affect only a minority. It calls for consultation and for additional support to be introduced by the end of 2026.
The longer-term view
The committee has prioritised urgent action, although it accepts that this would not help everyone, particularly those forced out of work several years before pension age because of ill health or disability. It therefore recommends further analysis of longer-term support, including the effects on health and social care services. Future impact assessments should examine not only average effects, but also outcomes for different groups, regions and income levels, as well as downstream costs.
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