State pension age needs to be 71 by 2050, says ILC

The UK will have to increase the state pension age to 71 by 2050 to maintain the number of workers per retiree, according to a new report from the International Longevity Centre UK. The move will have to be made to keep up with life longer life expectancy, it said. The figures used a dependency ratio based on the percentage of people aged 65 or older relative to the working adult population, aged 15 to 64. However, if the UK’s working adult population was defined as 20 to 64 years, to account for time spent in full-time education, the state pension age might need to hit age 70+ as early as 2040 to maintain the current dependency ratio, the ILC warned. It 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.” Jon Greer, head of retirement policy at Quilter said: “Just last year, the government attempted to claw back public favour among its core voters by delaying its widely anticipated state pension age increase. “At the time, the plan to delay was reportedly due to average lower life expectancy, but the ILC’s data suggests this may no longer be the case as it says that while the stall in life expectancy has temporarily eased the pressure for increases beyond 67 after 2027, in the longer term the pressure will mount.” It is forecast that the number of people over state pension age will grow significantly over the coming years while the proportion of the working age population to support them will start to fall. Figures from the ONS released last week showed the number of people aged 85 and over could grow in the next 15 years from 1.6million to 2.6million. Mr Greer said: “Not only will this heap pressure on in terms of state pension cost, but it will also result in a dire strain on social care and an urgent need for increased funding. “This morning’s report puts the state pension’s long-term sustainability into the spotlight and the government’s decision to delay last year may mean it has simply kicked an inevitability down the road for the next party to take government to deal with.” The IFS previously suggested that a one-year increase in the state pension age in the late 2030s would likely save around £8bn-9bn a year. However, delaying the planned rise in the state pension age to 68 by seven years would cost at least £50bn. Mr Greer said any increase would prove incredibly unpopular “so the government is highly unlikely to backtrack on its decision to wait until after the general election. “However, if this is the case, it may be left with the choice of reviewing the triple lock and replacing it with a less generous uprating mechanism and/or accepting that funding for state pensions is going to increase through higher taxes or national insurance.”

State pension age needs to be 71 by 2050, says ILC

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