The State Pension is poised to go bust in a few years so the Triple Lock must be suspended to safeguard Britain’s finances, a thinktank has warned. Analysis from the Adam Smith Institute (ASI) has found that the State Pension could become financially unsustainable as soon as 2036. This means the Treasury will be spending more on welfare than it receives in National Insurance (NI) tax receipts.

The State Pension accounts for the greatest proportion of Britain’s spiralling welfare bill. It is paid from current tax revenues rather than money set aside in a dedicated pot built up over a person’s working life.

ASI’s study suggests the increasing unaffordability of the State Pension is in great part due to the ratcheting effect of the Triple Lock, which guarantees the State Pension will rise each year by the highest of three measures: inflation, average earnings growth, or 2.5%.

According to the ASI’s study, the average person born in 1956 will receive £291,000 more than they paid in NI. The thinktank said this is creating an economic burden on working-age people made to “subsidise” pensioners.

It warned this will only get worse because of Britain’s demographic trends as by 2040 the UK is likely to have 22.7 million claiming benefits, including the State Pension, but only 34 million people of working age to foot the bill.

The ASI said it examined population figures along with data from the Office for National Statistics, HMRC and Office for Budget Responsibility to reach its stark conclusion.

Maxwell Marlow, the ASI’s Director of Public Affairs, said it should alarm us all that the State Pension could become unsustainable in little over a decade.

He said: “Such a dire prognosis is a symptom of Britain’s broken welfare state. Struggling workers and firms will not be able to subsidise the ballooning welfare bill for much longer.”

Mr Marlow explained that previous analysis said the “tipping point” would come in 2035. He said that even with the recent hike in National Insurance, the UK has only “bought” one more year at a cost in growth to Britain’s economy.

The expert added after 2036 the reserves of the National Insurance Investment Account Fund will start to be drawn down and from 2040 the Fund will start to shrink as deficits grow too large to be covered by investment earnings.

He said: “Even if the economy recovers beyond forecasts, the State Pension in its current form remains grossly unsustainable.

“Working people are already taxed to the hilt to fund pension-benefit payments and this unfairness will only deepen as our demographic deficit grows.

“If the Government is serious about securing Britain’s finances, it must suspend the Triple Lock immediately and move towards a system that is honest about the challenge posed by an ageing population.”