Experts predict that workers in the UK may have to work until they are 71 before claiming their state pension due to the impact of growing life expectancy and falling birthrates on the state pension. Research on life expectancy and birthrates has shown that the current retirement age of 66 is unsustainable, and the pension age is expected to rise to 67 between 2026 and 2028, and to 68 by 2044. However, the research suggests that this may not be enough, with anyone born after April 1970 potentially having to work until they are 71 before claiming their pension.
According to the International Longevity Centre, the state pension age in the UK would need to be 70 or 71 compared to the current age of 66, in order to maintain the number of workers per state pensioner. Furthermore, experts believe that this age limit may need to be set even higher due to the high rate of workers exiting the workforce before reaching state pension age, mainly due to preventable ill health.
One of the main concerns is that by age 70, only 50% of adults in England and Wales are disability-free and able to work. This smaller working population, alongside a large economically inactive population, reduces the tax base to pay for pensions and creates labor shortages.
While there is agreement that the pension age needs to rise, there is a debate about whose shoulders the increased cost should fall on. The Intergenerational Foundation, an independent think tank, has pointed out the financial disparities between younger generations and their parents and grandparents. They suggest that the over-60s should finance their own extra retirement years, and the money raised could be used to invest in improving the health and prospects of younger generations.
Some experts, however, argue that increasing the state pension age without addressing other cost-saving measures is not realistic or equitable. They emphasize the need for a greater focus on preventing ill health from early age through adulthood, as increasing the state pension age alone may not be an effective policy.
Overall, there are various perspectives on the matter, but the underlying issue is the sustainability of the state pension system and the increasing pressure on public finances from health and social care. The government has committed to ensuring that the state pension remains “a sustainable and fair foundation of income for future generations,” and has implemented employment and skills support programs for the over-50s as part of efforts to address the challenges related to the state pension age.