The state pension age rise to 68 may be brought forward sooner than expected, as the government grapples with the rising cost of funding an ageing population.
Despite life expectancy improvements stalling in recent years, the number of centenarians in the UK has more than doubled over the past two decades, adding to concerns over the long-term affordability of the state pension.
Tom Selby, director of public policy at AJ Bell, warned that with the cost of state pensions already at £125billion per year, financial pressures could force ministers to accelerate the current timeline, which plans to raise the pension age to 68 by 2046.
He said: "There is every chance the timetable to 68 will need to be brought forward at some stage – particularly if public finances remain in the doldrums.
"Assuming the bill continues to grow as expected as a result of longer-term life expectancy improvements, it risks placing an ever greater burden on taxpayers."
The state pension age is already set to rise to 67 by 2028, but further increases would mean millions of Britons could have to work longer before accessing their retirement income.
Chancellor Rachel Reeves is tackling a £22bn budget shortfall, prompting major welfare cuts that could impact pension policies. To bridge the gap, she has reduced Winter Fuel Payments for 10 million wealthier pensioners, sparking concerns from MPs and charities about the effect on vulnerable groups.
Experts warn that without further action, the financial strain may force an earlier rise in the state pension age to 68 and put the future of the triple lock under scrutiny, affecting millions of retirees.
Concerns are also mounting over the sustainability of the triple lock
GETTYThis decision would likely prove controversial, with Selby noting that any changes to the pension age would “inevitably hit the poorest, hardest”, given that the state pension remains a critical source of income for many retirees.
Alongside the pension age debate, concerns are also mounting over the sustainability of the triple lock, which guarantees that state pensions rise each year in line with inflation, earnings growth, or 2.5 per cent—whichever is highest.
While the policy has ensured pensioners receive inflation-proofed increases, Selby described it as “potentially very expensive and without a clear end goal”.
With the government already facing backlash over the decision to means-test the Winter Fuel Payment, further changes to pensions would likely be met with resistance.
However, Selby said a future administration will have to face up to this challenge and decide “what the state pension should be worth and for how long people should receive it”.
As financial pressures mount, many workers in their 40s and 50s could now be at risk of seeing their retirement plans disrupted—with a higher state pension age potentially forcing them to work for longer than anticipated.
Recent ONS data reveals a slight rise in UK life expectancy for the period 2021-2023 compared to 2020-2022.
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Earlier than expected state pension increases could be delayed due to life expectancy data GETTYLife expectancy at birth now stands at 78.8 years for men and 82.8 years for women. At age 65, men can expect to live another 18.5 years, while women have an average of 21 more years.
However, despite this marginal improvement, life expectancy remains below pre-pandemic levels. The ONS highlights that even before the pandemic, gains in life expectancy had already stalled.
As people live longer into retirement, this shift poses major challenges for pension funding and the long-term sustainability of the system.
The average cost of paying state pensions in the UK is expected to grow substantially as life expectancy continues its long-term upward trend. Experts warn this cost could potentially double, placing an ever greater burden on taxpayers.
The financial strain is compounded by demographic shifts, with an estimated 16,140 centenarians in the UK in 2023.
This represents more than double the number of people reaching their 100th birthday compared to 2003.
Older Britons are worried about the future of the state pension triple lock PAThe increasing proportion of older citizens requiring state pension support presents a mounting challenge for public finances.
Selby suggests that eventually difficult decisions will be unavoidable.
"At some stage a government will need to face up to this challenge and come to a decision on what the state pension should be worth and for how long people should receive it," he states.
These decisions will need to balance fiscal responsibility with protecting vulnerable pensioners.
