Experts have warned that retirement is becoming a “pot of gold at the end of the rainbow” for Brits, “forever receding the nearer they get”.
Pensioners could not be allowed to retire until they’re 80 by the 2070s (Image: Getty)
Experts have warned that a turbulent economic landscape could see the state pension age pushed back to as far as 80 years old. The state pension age is already set to rise from 66 to 67 next year, and then to 68 by 2046, but some think the only way to grapple with the UK’s ageing population is to hike it on a more dramatic scale.
Analysis by consultancy Barnett Waddingham has estimated that workers in the 2070s could be forced to wait until they reach 80 to withdraw their state pension, or face paying 50% more in National Insurance contributions. The trend could see retirement become “a pot of gold at the end of the rainbow, forever receding the nearer they get”, the firm warned.
It comes amid heightened scrutiny of the triple lock, which sees pensions rise by whichever is higher: 2%, inflation, or average earnings, and ahead of Rachel Reeves‘ Autumn Budget this month, where she is expected to scrap Labour’s manifesto pledge not to raise certain taxes.
An ageing population and the triple lock are the main issues in the state pension debate (Image: PA)
Industry figures have traced the increasingly untenable position of the state pension to the dual factors of an ageing population and the triple lock guarantee, causing both cost and demand to rapidly expand.
The number of people in older age groups is increasing, with 11 million people in England and Wales aged 65 or over and more than half a million over 90. The country’s over-65 population is also set to increase by a further five million in the next two decades.
Meanwhile, the Office for Budget Responsibility (OBR) cautioned in July that the triple lock is expected to cost an extra £15.5 billion per year by the next election.
Stuart McDonald, partner at consultancy LCP, told the International Business Times: “Life expectancy in the UK for young adults rose by 17 years during the 20th century, but state pension age did not increase at all.”
Mr McDonald added that this disparity will usher in “historically long retirements”, something that will “inevitably prove fiscally unsustainable”.
LCP has proposed tackling the problem by increasing the pension age by one year every decade for the foreseeable future to prevent retirement lengths from ballooning further.
Lib Dem former business secretary Sir Vince Cable is among those heaping pressure on the Chancellor to find new ways to cut costs ahead of the November 26 Budget.
He suggested that the triple lock “is not sustainable and makes no sense in the long run” and concluded that “a substantial tax is unavoidable” in the upcoming financial projection.
