Another increase to the state pension to 70 could be “on the cards” in a blow to older Britons, experts claim.
Proposals to raise the retirement benefit’s age threshold earlier than expected have been floated in recent years.
This has been in response to questions over the long-term viability of the triple lock, the metric used to determine annual rate hikes to the payment.
Under the triple lock, the state pension goes up by either the rate of inflation, average earnings or 2.5 per cent every year; whichever is higher.
In April 2025, the benefit will rise by £460 a year, or four per cent, in line with the average wages.
Based on figures from the Office for Budget Responsibility (OBR), the state pension costs the taxpayer £110.5billion, accounting for 42 per cent of total welfare expenditure.
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State pension age will rise to 67 by 2028 then it will further increase to 68 GETTYGoing into July’s General Election, Labour pledged to keep the triple lock in place throughout the next Parliament.
This has not stopped the Institute of Fiscal Studies (IFS) from suggesting it should be scrapped in lieu of another model.
The independent think tank has proposed “a four-point plan” to increase confidence in the state pension.
Hypothetically, this would involve hikes linked to wages to ensure pensioners’ incomes keep pace with rising living standards.
Raising the state pension age has been put forward to bring down the cost on the public purse.
As it stands, the state pension age is sitting at 66 years old and is scheduled to increase to 67 between 2026 and 2028 for those born after April 1960.
The benefit age threshold is scheduled to jump again to 68 between 2044 and 2046 which will impact people born after April 1977.
Rachel Lacey from interactive investor noted that the state pension age would need to be brought forward to 70 by 2040 to prevent the retirement system from buckling under pressure.
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Older people could wait longer or their state pension
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She explained: “Although previous governments have rejected recommendations from these reviews, calls are once again mounting to speed up the rate of increase.
“The London School of Economics, for example, recently published a report recommending that the increase to 68 takes place as soon as possible.
“Similarly, the International Longevity Centre (ILC) has said that to maintain the existing ratio of workers to pensioners, the state pension age would need to reach 70 by 2040 – a rate of increase that is much faster than the current schedule.
“The next review will take in wide-ranging evidence, including life expectancy and population projections, demographic trends, the state of the economy and the impact of measures to address inactivity in the labour market. It will also consider the impact of recent economic challenges such as global inflation and the Covid pandemic.”