The Government should look at increasing universal credit for 66-year-olds to prevent financial hardship stemming from the “lottery of life” as the state pension age rises to 67, according to a committee of MPs.
The Work and Pensions Committee said it is backing calls for the Government to increase universal credit for 66-year-olds.
It said ministers should consult on the change with a view to putting it in place by the end of 2026 as a temporary measure, allowing time to develop longer-term support.
There is evidence the longer wait for their state pension will “harm” 66-year-olds who are unable to keep working until 67, the committee said.
The state pension age has started a phased rise, gradually increasing in steps from 66 to 67, affecting new pensioners.
The report said: “For many, this will be a year of hardship, on inadequate working age benefits, potentially depleting savings they were relying on to support them in retirement.”
The committee said a growing number of 66-year-olds may have to rely on the standard rate of universal credit of around £425 a month for longer, despite worsening health.
Its report added: “On balance we support increasing the level of universal credit (UC) for all recipients in the year before state pension age because it has a greater impact in reducing poverty and hardship.
“We recommend it as a short-term approach, to mitigate the impact of the increase to 67, which has already started.
“We propose using UC on the basis that it should enable support to be provided quickly.
“We recognise that the impact on work incentives is a consideration. However, the proposal is for a modest increase in support in the year before state pension age.
“Those out of the labour market at this point in their lives are very unlikely to return to it.”
People on low incomes can apply for pension credit – but this support is only available once people have reached state pension age.
The committee said this leaves many pre-pensioners, particularly those with health issues, caring responsibilities or long histories in labour-intensive jobs, relying on the savings they may have set aside for retirement.
There is also a geographical consideration, with ill-health and disability concentrated in the most deprived areas, where there are fewer economic opportunities, the committee said.
The report said: “The impacts of the rise to 67 will be very uneven.
“For many unable to keep working, particularly on low incomes and in the most deprived areas, it will mean hardship as they wait longer for a state pension.
