The government has been told to increase the state pension age to 75 by 2035, in a move to tackle the challenges posed by an ageing society to the UK’s fiscal balance.
The proposal – which also includes raising the state pension age to 70 by 2028 – was made by the Centre for Social Justice, a think tank chaired by Iain Duncan Smith MP, former secretary of state for Work and Pensions.
The age at which individuals can claim their state pension is set to rise to 66 by 2020, 67 between 2026 and 2028, and 68 between 2044 and 2046.
The report Ageing Confidently - Supporting an ageing workforce, published yesterday (August 18), stated the age at which savers can retire needs to be accelerated further, as the state pension is the largest single item of welfare spending in the UK, accounting for 42 per cent in 2018.
The state pension bill has increased from £17bn in 1985/86 to £92bn in 2016/17, representing an increase from 3.9 to 4.6 per cent of GDP.
In 2018, the Office for Budget Responsibility predicted spending on the state pension would rise by 1 per cent of GDP, to 5.6 per cent by 2023. This will amount to an increase of £20bn, the think tank added.
Adding to this is the fact the country is “witnessing a significant demographic change,” since an increase in life expectancy and a decrease in the fertility rate means that older people make up a growing proportion of the population and could be in the majority by 2035, the think tank stated.
To ensure the older people continue to make an essential contribution to the economy as workers, carers, taxpayers and volunteers, the Centre for Social Justice has made a series of proposals:
Provided these initiatives are introduced, the think tank is then suggesting to raise the state pension age.
It said: “The state pension is an important benefit that provides security to those who have retired.
“If we expect this benefit to continue along with other public services, a sustainable state pension age must be introduced.”
Former pensions minister Ros Altmann has already criticised the proposals.
She said on Twitter the idea of raising the state pension age to 75 was shocking and “must not be allowed to happen”.
She added: “Major changes in pension attitudes [are] required due to big life expectancy differentials. Using age as a strict cut-off isn’t good policy.”
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