State pension warning as major change to ‘push older people into poverty’ | Personal Finance | Finance

The state pension age increase will push many savers into poverty, with women impacted more than men, experts have warned. The state pension age for women rose from 60 to 65 between 2010 and 2018, increasing to match the age when men become eligible for payouts.

The retirement age is now 66 for both genders, and will rise to 67 between 2026 and 2028. In the mid-2040s, the retirement age is expected to rise again to 68. But the Institute for Fiscal Studies (IFS) warns that these changes will push pensioners into poverty, with women hardest hit.

Deputy Director and Head of Retirement, Savings and Ageing at the IFS, Jonathan Cribb, told the Financial Times: “We’ve identified that the increase in the state pension age that’s happened more recently has had larger impacts on poverty than the previous increases that happened in the 2010s.

“More recently, increasing the state pension age pushed up poverty by about 14 percentage points for 65-year-olds, compared to pushing it up by about six percentage points for women in their early 60s.

“As you push the state pension age up, you affect a group of individuals who are less likely to be in work and more likely to be relying on the state for their income.

“So when you are pushing the state pension age from 60 to 61, most people are actually still in work at that point, meaning they can support themselves through income from labour as well as a state pension.

“As you get into your late 60s, that’s much less the case, and therefore pushing up the state pension age further pushes up poverty by a higher amount.”

Mr Cribb’s comments came after the IFS warned women will be more likely to suffer if the state pension age rises because they are less likely to remain in work into their late fifties and early sixties.

Statistics from the Office for National Statistics (ONS) show that over 70% of men between the ages of 55 and 64 are employed. This is compared to 63% of women of the same age.

This comes amid a growing debate over the sustainability of the state pension triple lock.

The triple lock guranteees that the state pension will rise in line with the highest of inflation, average earnings increase, or 2.5%.

The latest report from the Office for Budget Responsibility (OBR) suggested the cost of the state pension could be £200billion a year by 2073.

This has led some experts to suggest that the state pension age needs to rise faster. Some have even warned that it may eventually have to rise to 80.

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