State pension age nightmare as true cost of increase revealed | Personal Finance | Finance

New figures show that millions are set to lose nearly £18,000 overnight if Labour presses ahead with plans to push the retirement age even higher. And many will lose a lot more than that.

The state pension is 66 today but slated to start rising to 67 from 2026. Work and pensions secretary Liz Kendall has now brought forward a new review into the state pension age. This will examine when to lift the retirement age to 68.

The retirement age was originally due to hit 68 from 2044, but that could be brought forward.

Almost half of working-age adults are saving nothing for retirement, with 15million classed as “undersaving”. The low-paid, self-employed and ethnic minorities are especially vulnerable.

While this crisis has been brewing for years, Chancellor Rachel Reeves’s economic mishandling has brought it to a head.

Lifting the pension age is one of the few levers Labour has left to balance the books. Ordinary workers will foot the bill. Today, we’ve learned how much they could lose as a result.

Workers aged between 53 today will be the first ones affected if Labour hikes the state pension age to 68 from 2039 instead of of 2044, according to Rathbones.

They will miss out on a full year’s state pension. This is likely to cost them £16,918 in lost income.

A 52-year-old would be next to suffer. They’d miss out on £17,340 while those aged 51 will lose £17,774 – almost £18k.

Rathbone’s forecasts assume the state pension rises each year by 2.5%, in line with the triple lock backstop. If inflation or wages are higher than 2.5%, state pension losses could be higher too.

Younger workers in their 20s, 30s or 40s will lose even more than £18,000, as the state pension will be worth even more by the time they hit 68. And they’ll sacrifice even more if the state pension age is subsequently hiked to 69, 70 or beyond.

Remember, this is money people were expecting, based on years of National Insurance contributions. But it may be snatched away at the stroke of a Treasury pen.

Rebecca Williams at Rathbones warned today’s workers already face a far less generous retirement than their parents saying: “Cracks are beginning to show in the system.”

Rachel Reeves is desperately struggling to balance the books, but she’s completely boxed herself in. She cannot cut spending after the disability benefits rebellion, while having to pour billions into housing illegal immigrants.

The Chancellor has pledged not to break her own fiscal rules or raise the big three taxes of income tax, national insurance or VAT.

The state pension triple lock is becoming increasingly expensive, but scrapping it would be political suicide. Pushing the retirement age ever higher is the easier option. It doesn’t affect people right away. But as Rathbones shows, when it hits, it hits hard.

Keir Starmer, Liz Kendall and Rachel Reeves will be long gone by then, with any luck. But millions of pensioners hit by these changes will be worse off for the rest of their lives.