Workers aged between 51-53 could see their pension payments reduced by up to £17,774 if the State Pension age rise to 68 is brought forward by a year, according to Rathbones.
Under current law, the State Pension age will rise from 66 to 67 by April 2028 and to 68 between 2044 and 2046.
However, the Government could bring this change forward as part of a newly announced review into the State Pension age, which will assess whether the current age threshold is still appropriate against a backdrop of increasing life expectancy, rising public spending and a growing population.
In the last independent State Pension age review, conducted in 2023, there was a commitment to a principle that at least ten years’ notice should be given of any increase in the State Pension age.
As such, if the State Pension age rise to 68 is brought forward to 2039-41 it could mean a loss of one year’s full State Pension payments, totalling £16,436 for workers aged 51, £16,114 for those aged 52 and £15,798 for those aged 53.
Rathbones calculations are based on the new full state pension of £230.25 per week and assume 2% inflation per year thereafter. Under the triple lock guarantee, which guarantees at least a 2.5% annual increase, those figures would rise to around £17,774 for workers aged 51, £17,340 for those aged 52 and £16,918 for those aged 53.
Rebecca Williams, divisional lead of financial planning at Rathbones, said: “With longevity increasing and population pressures mounting, future generations appear set to face a less generous State Pension regime than that enjoyed by many of today’s retirees. The situation appears particularly precarious for those in their early 50s who face real prospect of missing out.
“The State Pension alone is not enough for a comfortable retirement. Individuals need a broad foundation built on workplace pensions, private savings, and the ongoing support of pension tax relief. Cracks are beginning to show in the system, and they must be addressed urgently if we are to maintain faith in the UK’s pension framework and ensure people are equipped not just to survive, but to thrive in later life.”
Rathbones said that while efforts to bolster pension adequacy through the revived Pensions Commission are welcome, the Government must ensure that new measures address the complex barriers preventing people from saving enough, including ensuring the self-employed are provided for.
Charlotte Kennedy, chartered financial planner at Rathbones, added: “Financial education is also essential. It remains a minor part of the curriculum. This must change. The earlier young people learn how pensions work, the more likely they are to start saving early and feel empowered to make informed financial decisions.”
