Hikes to the state pension age mean Britons currently between 51 and 53 years old may forfeit as much as £17,774 in retirement income should ministers expedite plans to bring forward future increases to the retirement age threshold.
Fresh analysis from wealth management firm Rathbones reveals that accelerating the timeline from 2044-2046 to 2039-2041 would mean these workers receive twelve months fewer pension payments.
The Labour Government has launched an assessment of state pension eligibility ages, examining whether current thresholds remain suitable given longer lifespans, escalating public expenditure and demographic shifts.
Those presently aged 51 stand to lose £16,436 based on today’s full state pension rate of £230.25 weekly, whilst 52-year-olds face a £16,114 shortfall and 53-year-olds could miss out on £15,798, according to the calculations which factor in two per cent annual inflation.
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Workers could lose retirement income if Labour raises the state pension age earlier than expected
These projections could increase to roughly £17,774, £17,340 and £16,918 respectively if the triple lock mechanism continues, which ensures pensions rise by inflation, earnings growth or 2.5 per cent annually – whichever proves highest.
Present legislation schedules the retirement age to climb from 66 to 67 by April 2028, followed by a further increase to 68 during 2044-2046. Statutory assessments of pension ages occur every six years.
Based on the previous evaluation by Baroness Neville-Rolfe in 2023, it should be maintained that British citizens should receive a decade’s warning before any changes.
The current review, concluding in 2029, could recommend bringing forward the rise to 68 by several years. Rathbones’ projections assume the Bank of England’s two per cent inflation objective and incorporate the existing weekly pension of £230.25, totalling £11,973 yearly.
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Rebecca Williams, who leads financial planning at Rathbones, warned that “future generations appear set to face a less generous state pension regime than that enjoyed by many of today’s retirees”.
She highlighted particular concerns for early-fifties workers, stating: “The situation appears particularly precarious for those in their early 50s who face real prospect of missing out.”
Williams noted increased client enquiries from people in their late forties and early fifties seeking retirement planning guidance.
“With shifting goalposts in the pension landscape, many are understandably keen to ensure they’re on track to retire comfortably and on their own terms,” she explained.
She emphasised that “the state pension alone is not enough for a comfortable retirement,” advocating for comprehensive retirement planning including workplace schemes and personal savings.
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Charlotte Kennedy, a chartered financial planner at Rathbones, welcomed initiatives to improve pension provision but cautioned that “most savers remain far behind what is needed for a comfortable retirement.”
She stressed that self-employed individuals and business proprietors must not be overlooked in any reforms.
Kennedy also advocated for enhanced financial literacy in schools, noting that pension education “remains a minor part of the curriculum, typically folded into maths or PSHE.”
“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,” she said.
