Why 51–53-year-olds face biggest hit from pension age change

Analysis shows some could lose a year of state pension – nearly £12,000 – if the rise is brought forward to 2039-41

Millions of workers could face a longer wait before receiving their state pension, but those currently aged 51 to 53 are likely to be affected the most if the Government brings forward a planned rise in the retirement age.

New analysis by wealth manager Rathbones found that if the change happens between 2039 and 2041, people born between April 1971 and April 1974 would miss out on a full year of payments – worth just under £12,000 at today’s rates.

The pension age is already set to rise from 66 to 67 between 2026 and 2028. Under current legislation, a further rise to 68 is due between 2044 and 2046.

However, both the Cridland Review and a Department for Work and Pensions (DWP) report under the previous government recommended accelerating this timeline. Labour has now launched a fresh review, as required by law every six years.

We spoke to the experts to find out how likely a change is, why those in their early fifties are most exposed, and what workers can do to reduce the financial impact.

How soon could the change happen?

While the next planned increase to age 67 is locked in, it is the next rise – from 67 to 68 – that is still under review.

Previous reports recommended that this step be brought forward to between 2037-39 or 2039-41, up to five years earlier than currently legislated.

Steve Webb, former pensions minister and partner at consultants LCP, said: “The big debate of relevance to older workers is when the move to 68 will happen. Both of the reviews undertaken to-date propose to bring that forward.”

Tom Selby, director of public policy at AJ Bell, said any final decision could be delayed until after the next general election due to the political sensitivity of the issue.

“We obviously don’t know at this stage what the state pension age review will conclude or whether the Government will countenance accelerating the rise to age 68 and possibly beyond.”

But he warned the financial pressure on the system is intensifying. “State pension costs, which are already fast approaching £150bn a year, will continue to balloon without change.

“The most obvious measures available are to scrap the triple lock or increase the state pension age further and faster – or both.”

Why will 51-53-year-olds be hit the hardest?

If the increase is moved to start in 2039 or earlier, workers born from April 1973 onward would fall into the new bracket – missing out on a full year of state pension payments.

Webb put the potential loss at “just under £12,000 at current pension rates”.

This group is in a particularly difficult position as they are too young to benefit from existing protections, but too close to retirement to easily change course.

Many may have been planning for retirement at 67, only to find themselves working another year, or more.

Jordan Clark, financial planner at Quilter, said: “There is every chance that the state pension age does rise from 68. For many this will mean the prospect of working longer than they may have envisaged.”

He said aligning the pension age more closely with life expectancy is increasingly being discussed, especially as the triple lock remains politically difficult to touch.

What can you do to soften the blow?

While changes to the state pension are beyond individual control, experts say there are practical ways to prepare.

Webb advised starting by checking your state pension age and planning for the possibility of having to work longer.

He said: “Think about your options if you had to work one or more extra years.

“Do you have enough private pension savings to act as a ‘bridge’ between when you’d like to retire and when your state pension starts? Could you retrain for a job that’s doable into your late sixties?”

Any change will mean private savings will also become increasingly important. Clark said: “You should not be relying on the state pension as your sole retirement provision.

“Building up a personal pension pot, whether through your workplace or privately, will be crucial.”

He encouraged contributing more than the minimum and regularly reviewing your investment mix, adding: “Even in your fifties, you should have a considerable portion invested in equities to avoid de-risking too early and help your pot last longer.”

Selby echoed that view: “The more you can save at a younger age, the easier it will be to build a pension that supports you later in life, even if the state provides less.”

Webb also advised checking your national insurance record for gaps that could affect your state pension entitlement.

He said: “If you have a large private pension, you may be able to stop work before your state pension starts.

“For others, it’s about planning now – and being realistic about whether your current job is one you can do into your late sixties.”

The Government has been contacted for comment.