Women out of employment in their late 50s harder-hit by state pension age increases; enhanced targeted support should accompany future increases

11th October 2025

Raising the state pension age boosts finances but hits women out of work in their late 50s hardest.

Increasing the state pension age is a coherent way for the government to ease pressure on the public finances from rising longevity at older ages.

But new research shows that the effects of previous state pension age increases have not been felt equally, with women already out of employment in their late 50s being particularly hard-hit by the rise from 60 to 66 that occurred between 2010 and 2020.

In particular, on average they experience a bigger drop in income as a result of state pension age increases. These women are more likely to have a low income, to be in poor health or to have a disability. Previous research has shown that state pension age rises led to a big boost in employment, but also pushed more people into income poverty.

State pension age increases are still appropriate as life expectancy rises. But this research underlines the need to find ways to help people stay in paid work at older ages, as well as provide additional targeted financial support for those who find it particularly difficult to adapt to a higher state pension age. These issues need to be carefully considered by the third review of the state pension age, which the government launched in July.

These are key conclusions from new research, published today by IFS and funded by the IFS Retirement Saving Consortium. Additional details on the findings include:

A key reason that state pension age increases have particularly hit the incomes of women already out of employment in their late 50s was that very few re-entered paid work in response to the reform. In contrast, for those who were in paid work in their late 50s, their employment rate at ages 60-64 jumped by 16 percentage points, as significant numbers delayed their retirement.
This means that falls in average income at ages 60-64 as a result of the increase in the state pension age were larger (a fall of £81 per week) for women who were out of employment in their late 50s than for those who were still in paid work in their late 50s (a fall of £42 per week).
Despite these falls in income, we find no evidence of a fall in average spending on some essential items such as food and energy. However, the likelihood of participating in social activities – such as visiting museums or theatres, or being part of a sports or social club – fell by 8 percentage points (from a baseline of 53% pre-reform) among all women affected by the rises in the state pension age.
Life satisfaction fell by 0.25 points on a 0 to 10 scale for all affected women (with a pre-reform average of 7.5), compared with 0.38 points for those who were already out of paid work. This fall is small. Previous research at the London School of Economics shows that given the significant exchequer gain from increasing the state pension age (a one-year increase strengthens the public finances by about £6 billion a year), the falls in well-being are modest compared with the potential beneficial effects on well-being from other ways of allocating public spending.
Heidi Karjalainen, Senior Research Economist at IFS and an author of the report, said:

‘Raising the state pension age is an important lever for easing fiscal pressures from an ageing population, but our research shows that the costs of increases so far have not been equally felt. Women already out of paid work by their late 50s, often in poor health and on low incomes, rarely return to paid work in response to a higher state pension age. Instead, they experience larger income losses and reduced participation in social activities.'

‘These findings do not mean that the state pension age should not continue to rise. Instead, they highlight the importance of enhanced support for those most harmed by increasing the state pension age. In general, helping people remain in, or return to, paid work at older ages, while providing additional targeted financial support for those who cannot, can also help maintain public support for future increases. And this could be done by using a small fraction of the boost to the public finances arising from an increase in the state pension age.'

Source
https://ifs.org.uk/news/women-out-employment-their-late-50s-harder-hit-state-pension-age-increases-enhanced-targeted