Within the next 50 years, pensioners will make up one quarter of the adult population, an independent reviewer appointed by the Government has said. An official review into the state pension age reports that improvements in life expectancy will increase the number of pensioners by 55% to 19.5 million by 2075. The number of people aged over 85 is projected to rise from 1.8 million to 5.1 million over the same period.
The Pensions Act 2014 requires the Government to review state pension age periodically and the Secretary of State must appoint an individual to prepare an independent report. The Department for Work and Pensions Secretary of State has appointed an independent reviewer Suzy Morrissey to prepare an independent report to assess the long-term sustainability of the state pension
The report also highlights that the proportion of those over the state pension age is projected to climb from 22% of over 16s to 28%. The yearly cost of state pension will rise from approximately 5% of GDP to 7.7% by the early 2070s. State pension age is currently 66 and is set to rise to 68 by 2046. Previous governments avoided increasing state pension age over voter backlash fears. A Government source said Labour is not expected to increase it, describing the move as “electoral suicide”.
Sir Steve Webb, a former pensions minister and now a partner at consultancy LCP, said: “In the UK, changes to state pension ages have become highly politically sensitive, and this is likely to lead the new government to be cautious about further major changes.
“A much more aggressive timetable for moving to 68, or a timetable for making younger workers work to 69 or 70, seems unlikely.”
The review will compare the UK with other nation and consider whether pension age is sustainable. Morrisey will also look at whether state pension should be linked to life expectancy to achieve “fairness between generations”.
Ministers have established a new pensions commission amid growing concerns that today’s workforce faces a higher risk of retirement poverty compared with previous generations. Analysis from the Department for Work and Pensions indicates that 15 million people are not saving adequately, with nearly half of all working-age adults putting nothing aside. The issue is especially alarming among the self-employed, low-income earners and certain minority groups.
Approximately three million self-employed individuals are making no retirement savings, while only a quarter of low-paid private sector employees contribute to a pension.