State Pension Age Rising to 67: What It Means and How to Bridge the Gap

The state pension age started rising from 66 to 67 on 6 April 2026. If you were born after 5 April 1960, you're affected. The question isn't whether the change applies to you — it's what you do about the gap.

Our general guide to the state pension age increase covers the timetable and who's affected. This article is about the practical bit: how to replace up to £12,548 in missing state pension income while you wait.

The Size of the Gap

The full new state pension from April 2026 is £241.30 per week — £12,548 per year. That's after the 4.8% triple lock increase.

Every month you wait beyond your expected retirement date costs roughly £1,046 in state pension income you won't receive. Here's what that looks like:

Extra wait	Missed state pension income
3 months	~£3,137
6 months	~£6,274
9 months	~£9,411
12 months	~£12,548

This isn't money lost permanently — your weekly amount stays the same once you start claiming. But you need to fund that gap from somewhere.

Strategy 1: Keep Working (Full-Time or Part-Time)

The most straightforward option. If you're healthy and your employer is willing, working through the gap means:

• Continued income without touching savings
• Ongoing National Insurance contributions (potentially boosting your state pension if you have gaps)
• Continued workplace pension contributions (both yours and your employer's)

Part-time as a bridge

You don't need to work full-time. Even modest earnings can cover the gap:

Example: David, born September 1960, faces a 6-month wait (state pension age: 66 years, 6 months). He needs roughly £6,274 to bridge the gap. Working 3 days a week at £15/hour for 6 months earns him about £5,850 — close enough, especially combined with some savings.

The tax efficiency angle

If you reduce your hours and earn below the £12,570 personal allowance, you'll pay no income tax at all. National Insurance stops at state pension age, so if you're over 66, you're already exempt from NI on earnings. This makes part-time work between 66 and 67 unusually tax-efficient.

Strategy 2: Pension Drawdown — Using Your Private Pension Early

If you have a defined contribution workplace pension or SIPP, you can access it from age 55 (rising to 57 in April 2028). Drawing enough to cover the gap is one of the most common bridging strategies.

How the tax works

• 25% of your pension is tax-free (up to the lump sum allowance of £268,275)
• The remaining 75% is taxed as income

But here's the key: if your pension drawdown is your only income and you take less than £12,570 in the tax year, you pay no tax at all.

Worked example

Maria, born January 1961, has a state pension age of 66 years and 10 months. She retires from work at 66 and needs to bridge 10 months — roughly £10,460.

She has a £180,000 defined contribution pension:

• She takes £10,460 via drawdown
• £2,615 is tax-free (25%)
• £7,845 is taxable — but with no other income, it falls within her personal allowance
• Total tax paid: £0
• Her pension pot drops to £169,540 — a reduction of about 5.8%

The impact on her long-term retirement income is modest. She's drawn less than 6% of her pot, and the remaining balance continues to grow.

Watch out for the MPAA

If you take any taxable income from your pension (beyond the 25% tax-free lump sum), you trigger the Money Purchase Annual Allowance (MPAA). This limits future pension contributions to £10,000 per year instead of the normal £60,000.

If you're still working and contributing to a pension, this matters. If you're fully retired, it's irrelevant.

Small pots exception

You can take up to 3 small pension pots of £10,000 or less as a lump sum (25% tax-free, 75% taxable) without triggering the MPAA. If you have old workplace pensions worth under £10,000, these are ideal for bridging without affecting your contribution allowance.

Strategy 3: ISA Withdrawals — Tax-Free and Flexible

If you've been saving into ISAs alongside your pension, this is their moment.

ISA withdrawals are completely tax-free, regardless of the amount. No impact on your personal allowance, no MPAA trigger, no complications.

When ISAs beat pension drawdown

• You're still working and contributing to a pension (ISAs don't trigger the MPAA)
• You're a higher-rate taxpayer and want to avoid pushing income into a higher band
• You want maximum simplicity — withdraw, spend, done

Example: James, born April 1960, faces a 1-month gap. He needs roughly £1,046. He withdraws this from his stocks and shares ISA. No tax, no forms, no impact on anything else.

The ISA preservation argument

Some financial planners argue you should draw from pensions first and preserve ISAs, because ISAs pass to heirs outside your estate more flexibly (though pensions will be subject to inheritance tax from April 2027). There's no single right answer — it depends on your tax position, estate plans, and how much is in each pot.

Strategy 4: Defer Your State Pension for a Higher Amount

This sounds counterintuitive when you're already waiting longer. But if you can afford to delay claiming beyond your new state pension age, each week of deferral increases your state pension by 1% every 9 weeks — roughly 5.8% per year.

What deferral looks like in practice

Deferral period	Weekly increase	Annual increase	New annual pension
6 months	~£6.96	~£362	~£12,910
1 year	~£13.99	~£728	~£13,276
2 years	~£27.99	~£1,456	~£14,004

When deferral makes sense

• You have other income (pension drawdown, part-time work, rental income) that comfortably covers your expenses
• You're in good health — the break-even point is roughly 17 years after you start claiming the higher amount
• You want a higher guaranteed income for life

When it doesn't

• You need the money now
• You have health conditions that reduce life expectancy
• The deferred amount would push your total income into a higher tax bracket

Strategy 5: Combination Approach

Most people won't rely on a single strategy. The most tax-efficient approach usually combines two or three:

Example: The Optimised Bridge

Helen, born July 1960, has a state pension age of 66 years and 4 months. She retires at 66 and needs to bridge 4 months — roughly £4,183.

Her assets:

• Workplace DC pension: £95,000
• Cash ISA: £12,000
• She could work part-time but prefers not to

Her plan:

1. Takes £2,000 from her Cash ISA (tax-free, no complications)
2. Takes £2,183 from her pension via drawdown (£546 tax-free, £1,637 taxable — but within personal allowance, so no tax)
3. Total tax: £0
4. Pension pot impact: minimal (2.3% of pot)

By splitting across ISA and pension, she keeps her pension drawdown low enough to avoid any MPAA concerns if she decides to do part-time consulting later.

Strategy 6: Equity Release or Downsizing (Last Resort)

If you own your home outright but have limited pension savings, equity release or downsizing is an option — though it should be a last resort for bridging a gap of just a few months.

Downsizing can free up significant capital. If you're already considering moving to a smaller property for retirement, bringing the move forward to coincide with the gap makes sense.

Equity release (lifetime mortgages) lets you borrow against your home without moving. But the compound interest means it's expensive over time and reduces what you leave to heirs. For a short-term bridge, it's almost never the best choice.

Don't Forget the Knock-On Effects

The state pension age change affects more than just your state pension:

Pension Credit

Pension Credit qualifying age is tied to state pension age. If you can't claim your state pension until 67, you can't claim Pension Credit until 67 either. The guarantee credit is currently worth up to £218.15 per week for a single person — losing access to this for an extra year is significant for people on low incomes.

Winter Fuel Payments

Since 2024, winter fuel payments (£200–£300) are restricted to Pension Credit recipients. A delayed state pension age means delayed Pension Credit, which means delayed winter fuel payments.

Universal Credit

If you're out of work between 66 and 67, you'll need to claim Universal Credit rather than pension-age benefits. This means potential work-search requirements — you may be expected to look for work or attend job centre appointments.

Council Tax

Some local authorities offer council tax reductions for pension-age residents. A higher state pension age delays eligibility.

How to Work Out Your Numbers

Everyone's situation is different. The right bridging strategy depends on:

• How long your gap is (1 month vs 12 months)
• What pots you have (DC pension, ISAs, savings, property)
• Whether you're still working (and want to continue)
• Your tax position (other income sources, personal allowance)
• Your health and life expectancy (affects deferral decisions)

Use the PoundSense pension calculator to model your full retirement picture. It combines your state pension with workplace and private pensions, so you can see exactly how much you need to bridge — and test different strategies.

Action Checklist

If the state pension age rise affects you, do these five things now:

1. Check your exact state pension age at gov.uk/state-pension-age
2. Get your state pension forecast at gov.uk/check-state-pension — and fill any NI gaps while you still can
3. Add up your other pots — workplace pensions, SIPPs, ISAs, savings accounts
4. Run the numbers in the PoundSense calculator to see your projected retirement income
5. Pick your bridging strategy — or combine two or three for the most tax-efficient approach

The state pension age moving to 67 isn't a crisis. But it is a planning problem — and planning problems are best solved with real numbers, not guesswork.