State pension overhaul could result in Universal Credit benefit boost for millions - what you need to know

MPs are calling on Universal Credit to be raised for those nearing state pension age as Britons prepare to wait longer for retirement benefits

Increases to the state pension age could result in a benefit boost for millions of people across the UK, but will you be entitled to this potential windfall?

Earlier this month, a cross-party group of MPs urged the Government to boost Universal Credit payments for 66-year-olds, warning that poverty among pre-pensioners could spike sharply as the state pension age climbs to 67 by April 2028.

The Work and Pensions Committee's report, published today, recommends Labour consult on the measure and implement it before the end of 2026 as a temporary intervention while longer-term solutions are developed.

At an estimated cost of £600million, the proposed uplift would represent a small fraction of the £10.5billion in savings generated by raising the pension age.

The committee described the need to tackle poverty as outweighing any concerns about the effect on work incentives, stating the "impact on work incentives is being outweighed by the imperative to reduce poverty".

Universal Credit currently provides a standard allowance of just £425 per month, while Pension Credit, accessible only once someone reaches state pension age, guarantees £1,031 monthly.

That gap leaves a growing number of 66-year-olds dependent on working-age benefits for an extended period, even as their health deteriorates.

Those worst affected include people managing long-term illnesses, individuals with caring duties, and workers with decades spent in physically demanding occupations.

Many in these groups find themselves drawing down savings intended for retirement to cover basic living costs while they wait to qualify for their state pension. The committee recommended the Universal Credit increase as a temporary measure to bridge this gap.

When the state pension age was last raised in 2020, poverty among people in the year before reaching it more than doubled, jumping from 10 per cent to 24 per cent and pushing 100,000 individuals below the poverty line.

The committee cautioned that the consequences are "likely to be greater this time", given that people must now wait an additional year and many are already in fragile health.

Employment figures paint a bleak picture: fewer than half of 66-year-olds, just 42 per cent, are currently in paid work.

Among the poorest pre-pensioners aged 60 to 65, nearly a quarter continue working despite being frail, a practice that research has shown worsens their health conditions rather than improving their circumstances.

MPs also criticised what they called "poor policymaking", noting that the most recent impact assessments underpinning the pension age rise date back to 2011 and 2013, with no updated analysis planned until after the transition is complete.

Caroline Abrahams, charity director at Age UK, welcomed the committee's findings: "We're delighted that the Select Committee has recognised that far too many people approaching their State Pension age find themselves in a very difficult financial position."

She noted that those aged 60 to 65 experience the highest poverty rates of any adult age group over 24, and described the current situation as "a senseless waste".