State pension overhaul could hand Universal Credit boost to millions | Personal Finance | Finance

An overhaul to the state pension system could hand a Universal Credit boost to millions of Brits. A committee has recomended an increase to the benefit to bridge the gap for people waiting to qualify for their state pension.

A group of cross-party MPs previously urged the Government to boost Universal Credit payments for 66-year-olds. They warned that many pensioners could struggle financially as the state pension age increases to 67 by April 2028. A recent report from the Work and Pensions Committee is now advising the Labour Party to implement the measure, which would cost around £600 million, by the end of this year.

As reported by GB News, the level of poverty among those waiting for their state pension payments is expected to spike in the coming years. The state pension age is rising from 66 to 67 between May 2026 and April 2028, and is legislated to increase further to 68 between 2044 and 2046.

While Universal Credit, which is claimed by over eight million people in the UK, provides a standard allowance of £425 a month, Pension Credit, which is only accessible when you reach state pension age, gives over twice as much as £1,031 per month. An increasing number of 66-year-olds are expected to become dependant on working-age benefits for a longer period of time.

As a result, some may withdraw savings intended for retirement to cover basic living costs. Those affected include carers and those with long-term disabilities.

The committee is now urging the government to increase Universal Credit to bridge the gap. Although the state pension age has rised before, they warn that consequences could be “greater this time” as people have to wait longer for Pension Credit.

Data shows that nearly a quarter of people aged between 60 and 65 are being forced to work despite being frail. Meanwhile, MPs have criticised “poor policymaking” with Caroline Abrahams, charity director at Age UK, describing it as a “senseless waste”.

She said: “We’re delighted that the Select Committee has recognised that far too many people approaching their State Pension age find themselves in a very difficult financial position.”