A 55-year-old on median UK earnings could need to save an additional £74 a month to retire at 67 if the state pension age increases to 68 seven years earlier than currently legislated, modelling from Barnett Waddingham has revealed.

The consultancy, which is part of Howden, calculated that a saver earning £38,000 would need to increase pension contributions by around 2.3 per cent of salary until retirement to bridge the one-year gap before becoming eligible for the state pension.

The Office for Budget Responsibility’s (OBR) July 2026 Fiscal Risks and Sustainability report assumed that the state pension age would rise to 68 between 2037 and 2039, reflecting the government’s stated policy position.

However, the increase remains legislated to take place between 2044 and 2046.

Barnett Waddingham’s analysis showed that higher earners would need to save a broadly similar cash amount to replace the lost year of state pension income, but the additional contribution would account for a much smaller proportion of their salary.

Indeed, a saver earning £80,000 would also need to contribute approximately £74 more a month, but this would represent around 1.1 per cent of their salary, compared with 2.3 per cent for the median earner.

The disparity would become more pronounced after allowing for pension tax relief and salary sacrifice.

For the individual earning £38,000, the additional contribution would reduce take-home pay by approximately £53 a month, equivalent to 1.7 per cent of salary.

By comparison, the impact on the take-home pay of an £80,000 earner would be around £43 a month, or 0.6 per cent of salary.

Barnett Waddingham warned that the findings demonstrated that, while most affected savers would lose broadly the same amount of state pension income, replacing it would be significantly less affordable for people on lower and middle incomes.

Barnett Waddingham partner, Martin Willis, said the debate had focused on the roughly £12,500 an individual would need to replace if they wanted to retire one year before reaching their revised state pension age.

However, he argued that the more immediate issue for many households would be how much additional money they needed to find each month.

“People have understandably focused on the £12,500 they’d need to replace if they still wanted to retire at 67," he said.

“But for many households, the more immediate question is what it means for their monthly finances.

“Our modelling suggests a typical 55-year-old on average earnings would need to find around an extra £74 every month - and if that’s difficult for someone on average earnings, it’ll be even harder for those on lower incomes.”

Meanwhile, Willis stressed that the loss of a year’s state pension would not have an equal effect across different income groups.

“The cash amount may be similar, but it takes a much bigger bite out of the budget for someone on average earnings than it does for a higher earner," he said.

“That’s why giving people plenty of notice of any changes is so important.”

Barnett Waddingham also warned that the modelling assumed individuals would continue working and contributing to their pensions until they retired at 67.

“Whether because of ill health, caring responsibilities or the physical demands of their job, anyone hoping to retire earlier or reduce their hours will have even less time to plug the gap,” Willis noted.

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