The Intergenerational Foundation has called on Prime Minister Andy Burnham and Chancellor John Healey to raise the state pension age to 70 by 2035. The proposal comes in response to the Second Pensions Commission Interim Report and aims to address fiscal sustainability.
Proposal Details
The think tank recommends increasing the state pension age to 70 by 2035, followed by an automatic adjustment mechanism linked to life expectancy. This would slow the growth of the old-age dependency ratio, easing the financial burden on working-age earners.
Current legislation already sets the state pension age to rise to 67 between 2026–2028 and to 68 between 2044–2046. However, the report warns that life expectancy gains continue to outpace these increases.
Fiscal Concerns
The report states: "The Government Actuary's Department 2020 Quinquennial Report suggests that the current trajectory is not fiscally sustainable in isolation, and will require more rapid increases in the SPA, increased NICs receipts or Treasury Grants." It adds: "Raise the State Pension age and introduce a clear automatic adjustment mechanism linked to life expectancy."
The state pension age is set to rise from 66 to 67 by early 2028, affecting those born on or after 6 April 1960. An independent review is currently examining the framework for increases beyond 67.
Support from IFS
The Institute for Fiscal Studies also supports further increases, noting: "In coming years, there is a good case for legislating for further increases in the SPA beyond 68." The Office for Budget Responsibility forecasts that state pension spending could rise to nearly 8% of GDP by the early 2070s, up from around 5% today.
