Workers under the age of 40, born before 1985, could be required to remain in employment until they reach 70 before becoming eligible for their state pension, according to a former Department for Work and Pensions (DWP) minister.
Warning from former pensions minister
Sir Steve Webb, who invented the triple lock mechanism while pensions minister for the former Conservative-Liberal Democrat coalition government, told The i Paper that the state pension age is “at risk” of rising to 70 even if the triple lock is scrapped. He cautioned that those under 40, and “particularly the under-30s”, are “at risk” of facing a pension age of 70.
Earlier this week, the Office for Budget Responsibility (OBR) published a report indicating that the planned increase in pension age to 68 will likely be accelerated by seven years, moving from the original 2044-2046 timeframe to 2037-2039.
Triple lock costs and sustainability
The triple lock ensures that the state pension rises each year by the highest of inflation, wage growth or 2.5 per cent, but costs have ballooned in recent years following economic shocks. Sir Steve, now a partner at consultancy LCP, said it was “not sustainable” to hold the retirement age given the strain on public finances.
He added: “When you think of everything that has changed over that period, it’s clearly not sustainable to hold state pension ages.”
Political reluctance and future inevitability
Webb said that such a controversial change was likely to be “decades away” as no politician would want to take the “flak for raising the pension age to 70” when it remained a long way off in the future. “The outcome could indeed be precisely that, but we won’t know for sure for many years to come because no one wants to announce it,” he added.
Tom Selby, director of public policy at AJ Bell, said that the rising expenditure – largely due to improvements in life expectancy – meant the Government “must do something” to bring costs down, otherwise it would need to “substantially pare back spending in other areas”. He added that it would be “no surprise to see the state pension age eventually hit age 70 for today’s younger workers” and urged them to build up private pensions.
Selby agreed with Webb, saying: “Regardless of what happens to the triple lock – and it will eventually have to be scrapped – further and possibly faster state pension age increases are all-but-inevitable; the only real question is when?”
