The State Pension age is rising: Is your payroll prepared?

The State Pension age is going up from 6 April 2026, from 66 to 67 years old.

Although the increase will be phased in over two years, employers must act early to ensure their payroll remains compliant with the changes.

Failing to update your processes could put you at risk of incorrect National Insurance (NI) deductions and that can quickly lead to reporting errors and HMRC enquiries.

What is changing to SPA?

Between April 2026 and March 2028, SPA will gradually increase to 67 years old.

Employees born between 6 April 1960 and 5 March 1961 will reach SPA at 66 years plus a specified number of months, depending on their exact birth date.

The Government has confirmed these timelines in its State Pension age timetable.

As life expectancy has risen, the Government has gradually increased SPA.

Over the past 15 years, it has already moved from 60 to 65 for women and from 65 to 66 for both men and women.

Employers must be aware that once an employee reaches SPA, they stop paying employee NI contributions.

However, you must still pay employer Class 1 NI contributions.

What does the SPA change mean for employers?

Employers must carefully monitor employees approaching SPA and ensure their NI deductions do not stop too early or continue for too long.

When an employee reaches SPA:

• Their NI category letter must change to ‘C’ in payroll systems
• Employee NI deductions must stop
• Employer NI contributions must continue

When the NI changes due to employees reaching SPA, this is treated as a mid-year category letter change.

Payroll teams must continue reporting year-to-date figures under the original category letter separately until the end of the tax year.

Employers must also obtain proof of age from their employee to prove they have reached SPA. This can include:

• A passport
• A birth certificate
• An existing CA4140 certificate of age exception (although new certificates are no longer issued)

If your fail to apply these changes correctly, you could end up with incorrect deductions and compliance issues.

How can you prepare your payroll for the SPA increase?

With the right preparation, employers can avoid a last-minute scramble when an employee reaches the SPA.

You should be making sure your payroll systems are compliant now and you can prepare by:

• Identifying employees born between 6 April 1960 and 5 March 1961
• Using the Government State Pension age calculator to confirm individual SPA dates
• Making sure your payroll systems can handle mid-year category changes correctly
• Training payroll staff on updated reporting requirements
• Reviewing internal processes for collecting and recording proof of age

How can we support your payroll processes?

The SPA changes will affect your payroll compliance and workforce planning and you must be aware of your employees’ and your own NI requirements.

Our professional team can help assess whether your payroll systems are prepared for the reforms and ensure correct NI category handling.

As more employees stay on in their role for longer, we can help forecast the workforce costs and assess how this will affect your cash flow.

For further advice or support with your payroll, contact our team today.