Pensions experts have raised the alarm that the state pension age could be pushed up to the 70s, due to increasing costs to taxpayers. April will see a rise of 4.1% in payments under the triple lock metric, causing some to question the long-term viability of the current state pension.
Aaron Peak, from the credit score platform CredAbility, has said that raising the state pension age seems “almost inevitable” as the expense for the Treasury mounts. Plans are already in place for a gradual increase to 67 between 2026 and 2028, and later to 68 between 2044-2046. But Mr Peak issued a warning that the access age could soon hit 70: “If pension costs keep rising, we could see talk of pushing the age to 70 by the 2050s or 2060s.”
He also acknowledged the political difficulty this would entail: “However, this will be a tough sell politically, especially for those in physically demanding jobs.” The triple lock may also soon have to change, with Labour ministers saying it will increase state pension payments by up to £1,900 a year over the course of this Parliament.
Mr Peak commented: “If wages and inflation continue to rise sharply, the Government may need to rethink the policy within the next decade, either by tweaking the formula or setting a cap on annual increases.”
Other retirement experts have warned that people may soon have to wait until their 70s to start receiving their state pension. Amy Knight, personal finance specialist at NerdWallet UK, said: “To ensure the UK’s pension system is sustainable, we could see the state pension age increase to 70 or older during the next two decades.”
She also warned that the increases to the state pension age could come “at a faster rate than planned”. Such changes could cause resistance from the public.
Ms Knight warned: “While it makes sense to delay the statutory retirement age as people live longer, previous increases in the UK and in other countries have been met with concern and anger from workers, who feel they do not have time to adjust their financial strategies and may be forced to effectively ‘unretire’.”
Presently, the full new state pension amount is £221.20 per week; following the 4.1% increase from April, it will go up to £230.25 per week. Another expert warning the triple lock may soon need to be amended is Steven Cameron, pensions director at Aegon.
Proposing a different approach, he said: “Pensioners could receive an inflation increase as a minimum, and if over the previous three years wage growth has on average been higher than inflation, they’d get an extra uplift. This avoids widely fluctuating outcomes at times when both inflation and earnings growth are unpredictable, smoothing things out but ensuring pensioners still share in sustained increases in the nation’s wealth.”