State Pension age ‘to hit 70’ – triple lock could be scrapped too in ‘grim news’ | Personal Finance | Finance

The State Pension already costs the Government more than £100 billion a year, up threefold since 2000. It will continue to climb due to the ageing population and cost of maintaining the triple lock, unless the Government forces everyone to work later in life.

Ministers may now be forced to accelerate plans to hike the State Pension age to keep it affordable, according to a new report.

It may have to rise to 70 by as soon as 2040, to keep the cost from spiralling out of control, according to a new report. Millions of today’s workers will be affected.

Under current plans, today’s State Pension age of 66 will climb to 67 between 2026 and 2028, and then to age 68, possibly between 2037 and 2039.

However, these may have to be brought forward, according to the International Longevity Centre-UK (ILC), in its response to the Government’s State Pension age review, which is due to report in 2023.

Under one scenario, the ICL said state pension age will have to rise 68 from as soon as 2031, then climb again to 69 by 2034, and then 70 by 2040.

This would maintain the balance between those who are working, and those who are retired, the ILC said.

Its head of global research Professor Les Mayhew, said the State Pension age has to rise further “to ensure fiscal sustainability, support intergenerational fairness and keep up with increases in life expectancy”.

The pandemic may have reduced life expectancy slightly but the long-term trend is “set in stone” although Mayhew warned: “Those who are unable to work for health reasons may well need additional help.”

The State Pension will probably survive but today’s workers should not rely on it and must save hard for their retirement, said Adrian Lowery, personal finance expert at investing platform Bestinvest. “If it does survive, the chances are it will be less generous and paid later in life.”

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That will be beyond most people’s reach, with the average pension pot at retirement worth just £61,897, according to the Financial Conduct Authority.

Many do not know how much they need to save for retirement but the answer is simple, Lowery said. “As much as you can sensibly afford.”

Workers on low incomes or the self-employed in the gig economy with no company pension may struggle.

Becky O’Connor, head of pensions and investments at Interactive Investor, said: “Younger people must save all they can rather than rely wholly on the State Pension.”