A research report from the International Longevity Center suggests that the state pension will have to rise to 71, the experts have warned. Currently, the state pension age is set at 66, however, it will rise to 67 between 2026 and 2028. An additional increase in the age of 68 is expected to take place between 2046 and 2048, though the government is considering proposals to lower it to 2037 and 2039.
Yet new research suggests that a much larger increase to the state pension will become a necessity. ‘In the UK, the state pension age would need to be 70 or 71 compared with 66 now to maintain the status quo of the constant number of workers per state pensioner,’ Les Mayhew, the Head of Global Research for the ILC said. ‘The recent stalling in life expectancy during the austerity years and COVID has temporarily eased the pressure for increases in state pension age beyond 67 after 2027 but longer-term the pressure will be on to increase it to 68 or 69 before that.’
The proposals would ‘plunge more into poverty in later life’ for those without private pensions.
Baroness Altmann
Baroness Altmann, a leading pensions expert, criticized the findings of the report as ‘unconscionable, favouring those with higher income’. The former Minister of State for Pensions said in an article that she believes the proposals would ‘plunge more into poverty in later life’ for those without private pensions, citing a report which showed the raising of the state pension to 66 doubled poverty amongst 65 year olds.
The National Pensioner Convention, an organisation representing over a million pensioners in the UK has criticised the proposals, publishing an article which warns that it will ‘condemn people even more to a “miserable retirement”. The General Secretary, Jan Shortt says that ‘although the number of people living longer has been rising, the number of those living with ill health and therefore not able to work longer, is also rising. So, making them wait to claim their pension for even longer would only increase poverty, and the demand on already creaking services such as health and care.’
Putting the state pension age at 71 would raise it way above any other country, with the highest being 67 in Australia, Greece and Denmark. Currently, no other country has any plan to raise the retirement age above 70, so doing so would very much be a radical decision.
Surprisingly this has not been taken well by people outside of politics either. Tony Codling from Lancashire said we ‘should do what the French do and bring the country to a halt’. The French Government last year announced plans to raise the state pension age from 62 to 64, still considerably lower compared to similarly developed nations like ourselves. However, this caused mass unrest and riots in France for over four months, with over one million in attendance. Whilst we would not expect the same reaction to such a policy in England, it shows how difficult it is politically for governments to tackle the growing problem that is pensions.
[I]t is electoral suicide to raise the state pension age with a growing older population, or even attempt to reform it
Whilst it is a valid point, it is clear that this is something a government does not want to have to address. For governments, it is electoral suicide to raise the state pension age with a growing older population, or even attempt to reform it – as seen with the government’s unwavering support of the ‘triple lock’ on pensions. Pensions take up more of the budget than anything else, with the government expected to pay a whopping £265.5 billion on pensions in the 2023-24 financial year.
The general consensus is that it is highly unlikely that the proposals put forward by the International Longevity Center will come to fruition for the foreseeable future. The ILC have recognised the difficulty in addressing the pensions issue in the current political climate, saying ‘[i]t’s unlikely that the current policy consensus will drive the changes needed to ensure that future generations of older people have the same opportunities as their predecessors’.
State pensions increase with inflation, or average earnings, or 2.5 percent – whichever is more. This adds up, and is becoming more and more costly for the government. However the only way to keep the expenditure at the same is to keep raising the age at which you can retire. Additionally, the number of Britons aged over 85 is expected to double in the next 25 years, and so the expense of state pensions will therefore continue to grow to an unworkable point. Realistically the government will be forced to pay pensions at a higher age and in smaller amounts, whether sooner or later.
So it begs the question, what will the state retirement age look like when the current set of students retire? Will the state pension system reach a breaking point?
