A cross-party group of MPs has called on the UK Government to introduce stronger financial support for older workers as the state pension age continues to rise, warning that many people approaching retirement could face growing financial hardship if existing benefit levels remain unchanged.
The Work and Pensions Select Committee has urged ministers to review support available to individuals who reach the age of 66 before becoming eligible for the state pension. The committee argues that increasing the pension age without providing additional financial assistance could leave thousands of older people trapped between declining health, limited employment opportunities and inadequate income.
The recommendations come as the UK prepares to raise the state pension age from 66 to 67 over the next two years, a policy intended to reflect increasing life expectancy and ease long-term pressure on public finances. However, MPs have warned that the transition risks creating a widening financial gap for older citizens who are unable to continue working but are not yet entitled to receive their state pension.
Committee Calls for Universal Credit Review
The committee has recommended that the Government consider increasing Universal Credit payments for people in the year immediately before they become eligible for the state pension.
Currently, individuals aged 66 who have not yet reached the revised pension age may need to rely on the standard Universal Credit allowance of approximately £425 per month instead of receiving pension-related support, including Pension Credit.
According to the committee, this situation could expose increasing numbers of older people to financial insecurity as eligibility for the state pension is delayed.
Debbie Abrahams, Chair of the Work and Pensions Select Committee, said policymakers must recognise the challenges faced by individuals approaching retirement age.
She warned that many older people already struggle with declining health and reduced employment opportunities, making it increasingly difficult to remain in work while waiting for their pension entitlement.
The committee believes that consulting on higher Universal Credit payments during the final year before state pension eligibility would provide a more secure financial transition for those affected by the policy change.
Rising Pension Age Raises Poverty Concerns
The report highlights growing concerns that raising the state pension age may contribute to higher levels of poverty among older people.
Recent analysis by the Institute for Fiscal Studies found that the poverty rate among 65-year-olds increased significantly after the pension age rose from 65 to 66 in 2020. According to the research, the proportion of people in poverty within this age group increased from 10% to 24% following the previous rise.
MPs warned that the forthcoming increase to age 67 could have an even greater financial impact unless additional measures are introduced to support those affected.
The committee argued that individuals nearing retirement often experience reduced earning capacity because of health conditions or difficulties securing suitable employment. Without adequate financial assistance, many could face extended periods of economic hardship before qualifying for their pension.
Growing Welfare Costs Present Policy Challenge
While the proposal aims to strengthen financial protection for older workers, it also presents a significant fiscal challenge for the Government.
Estimates suggest that increasing Universal Credit payments for people approaching pension age could cost the Treasury approximately £600 million.
The recommendation comes at a time when ministers are facing mounting pressure to control public spending, particularly in relation to welfare expenditure.
Official forecasts from the Office for Budget Responsibility project that total welfare spending will rise from £332.9 billion in 2025–26 to approximately £406.9 billion by 2030–31, reflecting increasing demand for benefits across multiple areas of the social security system.
Against this backdrop, policymakers must balance efforts to protect vulnerable groups while maintaining sustainable public finances.
Experts Warn Older Workers Need Greater Protection
Charities and independent experts have echoed the committee’s concerns, arguing that the Government should have prepared more thoroughly for the consequences of raising the state pension age.
Andrea Barry, from the Centre for Ageing Better, said more comprehensive support is needed to prevent people in their mid-60s from experiencing heightened financial insecurity.
She argued that many individuals approaching retirement are currently left to manage increasingly complex financial pressures with limited assistance.
Campaigners also point to broader labour market challenges affecting older workers, including age discrimination, long-term health conditions and caring responsibilities, all of which can reduce opportunities to remain economically active during the years immediately before retirement.
These factors, they argue, make the transition to a higher state pension age particularly difficult for those already living on modest incomes.
Government Reviews Committee Recommendations
Responding to the report, the Department for Work and Pensions said it welcomed the committee’s inquiry and confirmed that ministers would consider its recommendations in due course.
The department noted that only a very small proportion of Universal Credit claimants are currently aged 65 or 66, stating that as of February this group represented approximately 0.02% of all claimants.
Officials also highlighted the ongoing work of the independent Pensions Commission, which is examining ways to improve retirement savings across the UK.
Its interim findings indicate that nearly half of working-age adults are not saving enough to provide adequate income during retirement, raising wider concerns about long-term financial resilience among future pensioners.
Balancing Pension Reform With Financial Security
The debate surrounding the state pension age reflects broader questions about how the UK should respond to demographic change, rising life expectancy and increasing pressure on public finances.
While raising the pension age is widely viewed as an important measure to support the long-term sustainability of the pension system, MPs argue that reforms must be accompanied by targeted support for those most vulnerable during the transition.
The committee maintains that without stronger financial safeguards, more older people may find themselves caught between the end of working life and the beginning of pension entitlement, increasing the risk of poverty and financial instability.
As ministers prepare to review the recommendations, the findings are expected to contribute to wider discussions about welfare reform, retirement policy and the future balance between fiscal responsibility and social protection in the UK’s evolving pension system.
