Two groups issued State Pension £7K shortfall warning | Personal Finance | Finance

People approaching retirement are struggling to get by as they wait to claim their state pension, an expert has warned. A review has been launched looking at where the state pension age should be set. The access age is currently 66 for both men and women.

The state pension age will be moving up to 67 between 2026 and 2028, with plans in place for it to increase again to 68 between 2044 and 2046. Rebecca Lamb, external relations manager at debt advice charity Money Wellness, voiced concerns about the prospect of the age going up again.

She said: “Raising the state pension age risks hitting people on the lowest incomes the hardest. Many in physically demanding jobs or with long-term health conditions already struggle to work into their late 60s and could be forced to rely on far less generous benefits like Universal Credit for longer. While wealthier groups enjoy more years of retirement, making the system even less fair.”

She explained that there is a big difference between the state pension and the rate of working-age benefits. The full new state pension pays £11,500 a year while for Universal Credit, the standard allowance for a single person over 25 is around £4,800 a year, less than half this amount.

Ms Lamb said: “That gap of nearly £7,000 a year can make the difference between being able to cover rent, food and energy bills, and falling into hardship.” She added: “For people already struggling with poor health or caring responsibilities, being kept on a much lower benefit for longer could push them into real financial distress at a stage in life when security and stability matter most.”

The expert also warned that the uncertainty there can be around how changes to the system will work, such as the recent U-turn over Winter Fuel Payment, can be “just as damaging” as people can’t plan ahead properly.

She said: “Changes need to be clearly and consistently communicated to all those affected. To protect the most vulnerable, any changes must include targeted measures such as flexible early access options for those who cannot work longer, stronger support for people with health conditions, and reforms to pension credit to ensure nobody falls through the cracks.

“Without these protections, raising the pension age risks deepening inequality and leaving the lowest earners at a serious disadvantage in later life.”