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I express my gratitude to the Backbench Business Committee for granting me the opportunity to present this Work and Pensions Select Committee report on our inquiry into the transition to state pension age, which is a really important area for us to examine. Our inquiry follows very closely on from the inquiry we held last year into pensioner poverty—that report was published this time last year. During that inquiry, we identified the real health and financial issues facing many working-age people as they approach state pension age. This was particularly evident following the increase in the state pension age to 66 back in 2020, but as many—but not all—know, the state pension age has started to rise from 66 as of April this year, and will reach 67 by April 2028. Our reports have shown that people experience the effects of that state pension age increase unevenly. Our transition to state pension age inquiry asked a direct question: what happens to those who cannot keep working until their state pension begins?
The Committee recognises the pressures on the state pension system. In 2005, spending on the state pension and pensioner benefits was 5.3% of GDP. Twenty years later, as society has aged, that figure has increased to 6%, and it is estimated that by 2070 it will be as high as 9%. Over half of all Department for Work and Pensions spending is spent on the state pension and, as I have said, this is set to increase as our society continues to age.
The Committee recognises the need to balance sustainability, adequacy and fairness in our social security system as a whole, including our state pension system. However, fairness must mean fairness not only between generations, but within generations. Fairness to those who are least well equipped to build a secure retirement is equally important. Unfortunately, it is clear that disadvantage, ill health and frailty are not spread evenly across the country; they are concentrated in some communities more than others, and they go hand in hand with poverty. It cannot be fair to ask those with the poorest health, the fewest resources and the greatest risks to face the increase in state pension age without support.
The evidence that we received was clear: financial resources, the capacity to work, and good health help people manage the transition to a higher state pension age. However, many people reach their early 60s in poor health and unable to work, after years in low-paid and often physically demanding work. As the Health Foundation’s recent report shows, since 2012 the healthy life expectancy—the average age someone is expected to live in good health—has fallen by two years, to 60.7 years for men and 60.9 years for women. Again, that is an average; in areas such as mine, a former industrial area, the healthy life expectancy for men and women is 56 and 58 years, so we can see the difficulties that the country is facing with this issue. Of course, different cohorts will have different healthy life expectancies as well.
Many people experience disadvantages in older age as a product of a life lived in poverty, having few financial resources and having experienced insecure work and, often, poor housing. This poor health in later working life is reflected in different employment rates; for example, in 2025 only 42% of people aged 65 were in work. For those aged 66—the current state pension age—that figure fell to under 30%, less than one in three. However, ill health is not the only reason people leave work. The Minister, my hon. Friend the Member for Swansea West (Torsten Bell), told us that while poorer people tend to leave work before state pension age because of ill health and/or disability, wealthier people are more likely to retire early because they can afford to do so. There are other reasons why people leave work before state pension age, including becoming family carers.
On the flip side, we heard about older workers who wanted to work but could not find a suitable job, and people who had left employment because of illness or caring responsibilities and could not get back into work. Sometimes these people ended up having to draw down small pension savings just to get by before their state pension began. It is not generally recognised that the previous state pension age increase from 65 to 66 caused a doubling of absolute poverty among 65-year-olds. Our real concern is that the rise in the state pension age to 67 may have an even greater effect. The Committee heard that work-limiting health conditions among people aged 60 to 64 have increased from 28% in 2014 to 31% in 2024. We also heard that almost half of people aged 60 to 66 in the lowest income quintile were already classified as frail. These are people who are vulnerable to deterioration in physical and cognitive functioning.
The Department has said that the poverty that pensioners and pre-pensioners experienced when the state pension age rose from 65 to 66 was mostly temporary, because people were lifted out of poverty as soon as they reached state pension age. However, temporary poverty can still do lasting harm—it can mean going without essentials and carrying stress into later life. Half of pre-pensioners are already frail; experiencing poverty, even temporary poverty, increases the risk of accelerating or exacerbating this deterioration in physical and cognitive function.
These issues are not inevitable—they are solvable. First, older workers need better support, healthier workplaces and flexible working opportunities. The Government’s current approach is focused on supporting later working, including through the Mayfield review, which the Committee wholeheartedly supports and welcomes. As we have said in other reports this year, we wish the Government would do more to accelerate that work. However, it is unclear how many people would be lifted out of poverty by the Government’s current labour market measures. We hope that the Mayfield review will help in time, but it is a three to seven-year programme, and even if change comes quickly, it could come too late for many people who are now approaching the state pension age.
Support to stay in work often needs to reach people in their 50s, rather than in their mid-60s. That is why my Committee concluded that additional social security support is needed. That is not an abstract concern, but a direct and foreseeable effect of state pension age policy. For people unable to work, the longer wait for the state pension can mean a year or more on inadequate working age benefits, a year using up savings or a year of hardship. We recommend that the Government as a minimum consult on an uplift in universal credit in the year before state pension age, with the aim of introducing additional support by the end of this year. We heard that such an increase would cost around £600 million a year, but that must be considered alongside the estimated savings of around £10.5 billion a year once the state pension age is 67, compared with if it had stayed at 66.
We recognise that work incentives matter, but the proposal is modest. It is targeted at people in the year before state pension age. Many of those out of the labour market at that point are unlikely to return to it. The overriding priority would be to prevent hardship that would otherwise be the predictable result of public policy enacted in the Pensions Act 2014. We also recommend that when the Secretary of State’s state pension age review commences, they consult on longer term support for those unable to work up to state pension age. That review should model costs and benefits, including the effects on work incentives downstream and on health and social care services.
Our report also looks at Government decision making. The Government have relied on impact assessments from 2011 and 2013. We think those assessments are now outdated and insufficient. They do not reflect the recent increase in work-limiting ill health and deepening inequality in healthy life expectancy, and they do not provide a basis for understanding who would be most affected by the rise to 67. In 2023, the previous Government decided to proceed with the increase to 67, but said they would keep under review the position of people unable to continue to work. No such review had been published by the time of the 2024 general election, and the current Government do not plan to evaluate the increase until after it is completed in 2028. That is too late. They will have missed an opportunity to identify risks and put mitigations in place before any further increases take effect. [Interruption.] I have just about half a minute left, if that is convenient, Madam Deputy Speaker.
The Committee recommends a more holistic approach to future assessments. The Department should consider the cumulative impact of policies on individuals. It should use evidence that reflects employment history, occupational class, health status, caring history, income and protected characteristics. It should consult the chief medical officer on health impacts. It should estimate likely poverty increases in time to act before they happen.
I also mention the importance of communication. Not everybody is aware of the increase to 67, and we know from previous pension policy the impact that can have on people. Finally, I express my concern about the irresponsible rumours of a potential acceleration of the further increase in the state pension age. That fear-mongering is unhelpful, to say the least, and is untrue. I commend my report to the House.