Following reforms announced in 2011 by the government, the state pension age is set to increase to 66 between 2018 and 2020 and to 67 between 2026 and 2028, before rising again to 68 in 2046 and 69 around a decade later.
Mr Osborne is set to announce today that the rise to 68 will be brought forward and that further increases will see the age hit 70 by the late 2050s, a report in FTAdviser sister paper the Financial Times indicates.
Tom McPhail (pictured), head of pensions research at Hargreaves Lansdown, said the rises would mean today’s 20-somethings would be retiring at 70 and today’s 40-somethings would face an earlier rise to 68.
Many in the industry have argued that state pension age must increase at a faster rate than planned to keep up with rapidly rising longevity.
The number of people of state pension age is projected to increase by 31 per cent from 12.3m last year to 16.1m by mid-2037 despite the current planned increases to the age people can begin claiming benefits, according to data published last month by the Office for National Statistics.
Over the same period, the number of people of working age - which for the purposes of the report is those aged between 16 and state pension age - is projected to rise at a far slower rate of 12 per cent from 39.4m in mid-2012 to 44.2m by mid-2037.
This means by this time there will be 2.7 working age people for each pensioner, down from a ratio of 3.2 last year.
Last year, the Institute of Directors argued that the UK government should raise the retirement age to 70 as soon as possible.
In its ‘roadmap for retirement reform 2012’, the IoD argued that increasing longevity is the “elephant in the room” for the pensions industry and that the current plan for increasing retirement age is not strong enough.
Instead of a plan culminating in a state pension age of 68 in 2046, the IoD called for a pension age of 68 in 2032, 69 in 2038 and 70 in 2044.
Mr McPhail said: “This was always going to happen, it was just a question of how and when it was unveiled. There are provisions in the pensions bill for the SPA to be linked to life expectancy.
“Currently, the SPA will rise to 67 by 2028 but will then pause before rising to 68 between 2044 and 2046. This was already widely acknowledged as being too late and too slow.
“Given current low levels of private savings and improvements in life expectancy, it was unrealistic for those in their 40s and younger to expect that they wouldn’t see their State Pension Age rise again above age 67.
“In reality, many in work today are already unlikely to be able to afford to retire until their 70s, irrespective of when their state pension falls due.”
John Lawson, head of pensions policy at Standard Life, warned in 2011 that government plans could eventually mean clients’ children retiring as old as 73.