RETIREMENT WARNING FOR BRITS IN THEIR FORTIES: STATE PENSION AGE 'COULD RISE TO 68 FASTER TO PAY FOR KEEPING THE TRIPLE LOCK'

Brits in their forties have been warned they face a higher retirement to fund keeping the so-called 'triple lock'.

Rishi Sunak vowed yesterday to keep the policy - which sees the state pension rise by the highest out of earnings, inflation and 2.5 per cent - for at least the next five years.

Labour has also signalled it would stick with the long-standing commitment, originally introduced by the Coalition.

But there have been mounting concerns about costs, with the value of the pensions going up faster than earnings and the population aging.

Lord Willetts, a former Tory minister and now president of the Resolution Foundation think-tank, warned the 'precedent and evidence so far' indicates that the triple lock makes faster increases in the pension age more likely.

The age is already slated to rise to 67 between 2026 and 2028, but the peer told the i newspaper 'it is possible that the further increase could be speeded up'.

Currently the legal position is that the state pension age will reach 68 from 2044-46.

Last March Work and Pensions Secretary Mel Stride delayed a final decision on whether that date would be brought forward - potentially affecting anyone currently in their mid-forties - until after the general election.

Giving evidence to the Liaison Committee yesterday, Mr Sunak said the public can 'safely assume' the triple lock would be kept in place throughout the next Parliament if the Tories win the election.

Asked whether he thought it was affordable, the PM said: 'I do, because the track record of the Government is that we make priorities, and making sure that if you have worked hard all your life you have the dignity that you deserve in retirement is important to me, it's important to the Government, and the triple lock is an expression of that.'

An official review of the retirement age published last spring painted a stark picture of the massive burden on the public finances - and what might need to happen to keep the books under control.

Former Tesco director Baroness Neville-Rolfe suggested setting a rule that Britons receive pensions for 31 per cent of the average life expectancy. There should also be a ceiling of 6 per cent of GDP spent on state pension.

Those principles would have big implications for younger workers, with the Tory peer saying that the retirement age should reach 68 between 2041 and 2043.

It could then reach 69 between 2046 and 2048 - with those projections indicating that it would need to hit 70 in the early 2050s.

That would be when people born in the 1980s would be looking to bow out of the workplace.

The review stressed that slowing improvements in life expectancy and the fallout from Covid have made the figures highly uncertain.

However, last month a report from the International Longevity Centre report painted an even bleaker picture, stressing that developed countries around the world are grappling with the same problems.

It suggested people born in 1970 could have to wait until they are in their seventies to get the state pension.

Between 2000 and 2050 the dependency ratio - the proportion of the population aged 65 or over compared to those of working age - is projected to rise from 21.2 per cent to 51.1 per cent.

As a result the report suggested the state pension age might need to be over 70 by 2040 in order to maintain the current ratio of workers per state pensioner.

That is based on people staying in education or training until age 20, rather than joining the workforce at 16.

2024-03-27T09:20:26Z dg43tfdfdgfd