The strain on the state pension is expected to increase, as almost a quarter (24 per cent) of people living in the UK will be aged 65 or older by 2042, up from 18 per cent in 2016, according to new data.
The figures released today (June 24) by the Office for National Statistics showed that despite more people working beyond state pension age strain on the system is inevitable as the rise in the number of over 65s has been greater than the increase of older workers in the past 20 years.
There are 2.7m more over 65s living in the UK than there were in 1998, while the number of workers aged 65 plus has only risen by 800,000, the ONS stated.
As a result, state pension spending has continued to rise. It amounted to almost £92bn in 2017 (equivalent to 5.1 per cent of GDP), up from £26bn in 1992 (3.6 per cent of GDP).
Based on current population trends, the Office for Budget Responsibility predicted that state pension expenditure will rise to 6.1 per cent of GDP by 2042.
Jon Greer, head of retirement policy at Quilter, noted this could see further changes to the state pension age.
He said: "The ONS are not sitting on the fence when it comes to moving the timetable forward to raise the state pension.
"They staunchly point out that by raising the state pension age to 68 in 2039, seven years earlier than currently projected, there would be 23 fewer pensioners for every 1,000 people of working age."
The state pension age has been set at 65 for men since 1925, and was equalised for women in November.
Under the current law it is due to increase to 68 between 2044 and 2046.
But in July last year, the Department for Work & Pensions (DWP) decided the increase in the state pension age should be brought forward to age 68 between 2037 and 2039 because of increases in life expectancy.
The change will leave 7.6m people £10,000 worse off, according to analysis from the House of Commons Library.
Mr Greer added: "With the government continually hinting that it needs to shift its position as a nanny state, people need to ensure they are making enough provision for themselves. Reliance on the state is not a safe bet."
Tom Selby, senior analyst at AJ Bell, noted if the older population was healthy and economically active, the impact of this demographic shift on younger generations would be less severe.
He added: "But it’s worth noting the recent increases in activity among older workers have coincided with rising state pension ages, particularly for women, and so could yet prove to be a short-term phenomenon."
Mr Selby also said recent data had pointed to a significant slowdown in life expectancy improvements after decades of unbroken improvements.
He said: "It is not yet clear exactly what has driven this trend, although it’s possible austerity measures introduced since 2010 have contributed.
"But if – and it is a big if – we are experiencing the end of life expectancy improvements, rather than a temporary blip, it would have enormous implications both for the ONS’ future projections and wider government policy."