A leading think tank has issued a stark warning that increasing the state pension age to 70 may be a necessary step to avert a future debt crisis. The Intergenerational Foundation has told both the Department for Work and Pensions (DWP) and the Labour Party government that the current system is financially untenable.
The Unsustainable Pressure of the Triple Lock
The report identifies the state pension Triple Lock as a core problem, labelling it "not only unsustainable but also unpredictable". This policy guarantees annual increases in the state pension by the highest of inflation, average earnings growth, or 2.5%.
This has led to a dramatic skew in government spending. According to the analysis, per-person Government expenditure on pensioners has risen by 55 per cent in real terms in recent years. In stark contrast, spending on children increased by just 20 per cent over the same period, highlighting growing intergenerational inequalities.
A Proposed Timeline: Retirement at 70 by 2035
The Intergenerational Foundation's proposed solution is bold. It suggests raising the state pension age to 70 by 2035. This recommendation is based on the 2022 Office for National Statistics (ONS) cohort life expectancy projections.
Under this plan, the average period of retirement would shrink significantly:
- For men: to around 16 years, down from 19 under the current timetable.
- For women: to around 19 years, down from 22.
The report acknowledges such reforms would be "politically difficult" but argues they are essential for long-term fiscal stability.
Learning from Abroad: The Dutch Model
Beyond raising the pension age, the think tank calls for a fundamental overhaul of the UK system. It proposes mirroring the Netherlands’ two-thirds model for retirement. This model aims to provide clarity and fiscal savings by linking pension benefits more directly to contributions and life expectancy.
This approach also recognises that healthy life expectancy rises more slowly than overall life expectancy. It accounts for the likelihood that some additional years will be spent in poor health, aiming to keep reforms fair as well as sustainable.
The report concedes that setting multiple pension ages based on class, region, or occupation would be overly complex. Instead, it recommends addressing inequalities through:
- Stronger bridging benefits for those unable to work until state pension age.
- Early access for individuals with very long contribution histories.
- Better support for people with disabilities or long-term health conditions.
The findings place significant pressure on policymakers to address the long-term affordability of the state pension, with profound implications for workers of all ages across the UK.
