State pension age rise update as UK savers facing £10bn blow

The UK's state pension age is set to raise to 67, which is predicted to be a multi-billion pound gain for . Increasing the age by one year by 2029-2030 will generate a staggering £10.4billion for The Treasury, according to analysis by the Office for Budget Responsibility (OBR). The major saving for the would represent a total of 5.7% of total pensioner spending for that financial year.

However, the hike in age would significantly reduce the number of Brits eligible for the state pension that year. 820,000 individuals will have their payments delayed by another year, encouraging them to stay in the workforce. OBR data shows the government's savings will predominantly come from the fewer 66-year-olds receiving the pension that year, totalling £10.2bn.

The additional £0.2bn will be saved through the fewer number of 66-year-olds receiving Pension Credit.

However, the savings from the pensions will be significantly offset by the increased number of payments given out for working-age benefits. For example, those missing out on a pension will be entitled to Universal Credit - which is forecast to total £700million in 2029-2030.

The OBR also highlighted that if the number of 66-year-olds who receive Universal Credit remains the same as the currency 7.4%, the cost would be higher.

On the other hand, the rise in state pension age to 67 could work as an incentive to remain or even join employment, which the government would benefit from tax-wise.

The previous rise in the state pension age from 65 to 66 showed employment rates hiking up by 7.4% for men, and 8.5% for women. 55,000 more 65-year-olds were in employment than the year prior, with average earnings rising £52 per week, the Department for Work and Pensions revealed.

Ms Reeves would now be hoping that the rise to 67 would generate similar results, boosting tax profits by £0.9billion.

Pension analyst and managing director of Standard Life, Dean Butler has urged Brits to be prepared for retirement financially, as the state pension may not be enough to cover a certain standard of living.

He told : "The state pension only covers a very basic lifestyle less than is needed for a minimum standard of living in retirement, according to the Pensions and Lifetime Savings Association (PLSA)."

He added that it should "only form part of your overall retirement plan", explaining the importance of saving for a personal or workplace pension.