Update on State Pension Age (SPA) and Statutory Sick Pay (SSP) in the UK

Change in State Pension Age (SPA)

The UK state pension age has undergone its most significant change in years. Starting 6 April 2026, the retirement age for claiming the state pension will gradually increase from 66 years to 67 years. This increase is a part of the phased implementation, which will be rolled out over a two-year period and will directly affect millions of people planning their retirement.

• The first affected group will be those born between 6 April 1960 and 5 March 1961, and they will not be eligible for full state pension exactly on their 66 birthday. The date to become eligible for the State Pension after 2026 will depend directly on the exact birth date. Instead of a fixed age, individuals will now qualify at 66 years and an additional number of months, based on when they were born between April 1960 and March 1961.
• Anyone born on or after 6 March 1961 will need to wait until the age of 67 to receive the state pension in full.
• The UK government provides an online calculator to determine the exact state pension age based on date of birth and National Insurance record. This is the most reliable way to confirm the eligibility date and plan accordingly.
• Employers must update National Insurance categories and payroll records for employees reaching these new thresholds to ensure correct contributions.

Our comments

This phased schedule helps prevent sudden changes to the pension system while allowing individuals time to adjust their retirement plans. Though the increase is gradual, it can significantly affect when financial support begins for those depending on the State Pension. The government's approach seeks to balance economic sustainability with fairness.

Change in Statutory Sick Pay (SSP)

Effective 6 April 2026, the changes in Statutory Sick Pay (SSP) represent one of the most significant changes to the UK sick pay framework in decades. By introducing day-one entitlement and expanding eligibility, the UK government aims to provide greater financial security for workers when they are sick.

Elimination of waiting days

Statutory Sick Pay (SSP) is now effective from day one. The earlier day unpaid waiting period has been removed, so employees receive pay starting from their first full day of illness.

Abolition of earnings threshold

The Lower Earnings Limit (previously GBP125/week) has been removed. All eligible employees, including part-time and casual workers, now qualify for SSP regardless of their earnings.

New payment calculation

Employees now receive the lower of the flat weekly rate (GBP123.25) or 80% of their average weekly earnings (AWE). Earlier, the weekly rate was (GBP118.75).

Transitional protections

Employees already receiving SSP before 6 April 2026 are protected from pay reductions. They will continue to receive the flat rate rather than the 80% calculation for the duration of that continuous absence. This protection applies until they return to work or their SSP entitlement ends.

Our comments

The reforms made in SSP will have a direct impact on employer costs and processes. The bigger practical challenge is operational for the employers, where the payroll systems need to be updated to reflect day one entitlement and new earnings linked calculations. Also, leave policy will need revision to ensure that they reflect the rules accurately to remain compliant with the official guidance.