As the United Kingdom grapples with the challenges posed by increasing life expectancy and declining birth rates, experts suggest that the state pension age may need to be raised to 71 for middle-aged workers.

Research indicates that the current trajectory of raising the retirement age from 66 to 67 between May 2026 and March 2028 and to 68 from 2044 may not be sufficient.

The study, conducted by Les Mayhew, associate head of global research at the International Longevity Centre, emphasises the impact of preventable ill health on the sustainability of the existing pension structure.

Mayhew notes that to maintain the current ratio of workers to state pensioners, the pension age would need to be increased to 70 or 71. Taking preventable ill health into account could necessitate an even higher retirement age.

By the age of 70, only 50 percent of adults in England and Wales are disability-free and capable of working. The combination of a shrinking working population, a large economically inactive population, and rising pension costs creates financial strain on the government.

According to the Office for Budget Responsibility, pensioner benefits are projected to cost the UK government £136bn in 2023-24, with £124bn allocated to state pensions.

What about those with shorter life expectancies?

Jonathan Cribb, head of retirement at the Institute for Fiscal Studies, acknowledges the need for a higher pension age but warns against implementing it without addressing broader cost-saving measures. Cribb emphasises that an increase in the retirement age could disproportionately affect individuals with shorter life expectancies due to poor health.

The Intergenerational Foundation supports the notion of a rising pension age but questions the distribution of the financial burden. Their research reveals that younger generations lack the financial assets of their predecessors, making them vulnerable to insufficient income in retirement. The foundation suggests considering life expectancy and occupation when determining pension age and proposes a wealth tax to fund retirement, reduce income tax, and alleviate the economic burden on younger generations.

Experts like Angus Hanton and Andrew Scott caution against solely relying on an increased retirement age. Hanton advocates for a wealth tax to finance extended retirement years for the elderly, while Scott emphasises the importance of preventative measures against ill health from early age through adulthood.

Support with health issues is crucial

David Finch of the Health Foundation warns that raising the state pension age without supporting workers with health issues could worsen existing health inequalities. Finch suggests that the government should provide more assistance for those out of work due to health problems, and employers can contribute by adapting roles and maintaining contact with employees on sick leave.

In response, the government asserts its commitment to ensuring a sustainable and fair foundation of income for future generations. A spokesperson highlights a £70m investment in employment and skills support for individuals over 50, as well as a £2.5bn Back to Work plan and £14.1bn investment in health services to promote longer, healthier lives.

 

 

 

 

Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at the University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.