State pension age hike to 80 ‘may be necessary’ as triple lock burden grows
The state pension age could be pushed as high as 80 under bold proposals aimed at easing the financial pressure caused by the triple lock system, according to fresh analysis.
This suggestion comes amid stark warnings that current pension commitments are rapidly becoming unaffordable for future generations.
Analysts at consultancy firm Barnett Waddingham argue that the Office for Budget Responsibility (OBR) has seriously underestimated the long-term cost of maintaining the triple lock, especially as people continue to live longer.
Jack Carmichael, senior consulting actuary at Barnett Waddingham, said: “There is a very real risk that the OBR’s analysis of the future cost of the state pension actually doesn’t go far enough to illustrate how much longevity risk the current system poses to the UK’s public finances.”
The concern? The rising cost of paying pensions in an ageing Britain. And if changes aren’t made soon, taxpayers could be saddled with a growing bill.
Earlier this month, the OBR labelled the state pension a “large financial risk,” estimating it could cost the Treasury £15 billion to maintain the triple lock in the coming years, nearly triple the original forecast.
But Barnett Waddingham’s latest research goes further, warning that under more realistic life expectancy projections, annual costs could shoot up by another £8 billion.
That’s four times more than the OBR’s current estimates.
The firm says the government’s modelling is too optimistic, assuming a relatively modest improvement in life expectancy. But Carmichael suggests a more cautious lens is needed, one that closes the gap between the longest and shortest lifespans in the population.
“[It’s] modelling uses a high life expectancy scenario, based on the Office for National Statistics (ONS’s) definition in their population projections, that results in an additional annual state pension cost of c. £2billion in today’s terms…
Under this alternative life expectancy sensitivity, the annual cost of the state pension would increase by £8billion… To keep the cost at a similar proportion of GDP would then require a massive increase in the state pension Age, potentially up to the dizzying heights of age 80.”
That’s right. Eighty. Such a change would reshape retirement planning for millions of Britons and put the UK at the very top of the global retirement age ladder.
In light of these projections, ministers have launched a detailed review of the UK pension system. The focus? Financial sustainability. Officials are examining the impact of increasing the state pension age, especially as the population ages and healthcare improves.
As part of this wider effort, the UK government has revived its pensions commission to help assess the long-term viability of pension structures, including when and how Britons can begin claiming.
The review comes amid mounting pressure to keep the triple lock, which guarantees annual pension increases based on inflation, wage growth or 2.5%, whichever is higher. While the government insists it won’t touch the triple lock during this Parliament, experts suggest this generosity may come at a high price.
Steven Cameron, pensions director at Aegon, weighed in: “Continuing the triple lock indefinitely would necessitate more rapid and extensive increases to the state pension age than would otherwise be required.”
That puts younger generations in a difficult spot. Keep the triple lock, and they may have to work far longer before claiming retirement benefits.
Lily Megson-Harvey, policy director at My Pension Expert, acknowledged the danger: “Significant modifications [to the triple lock] could severely impact retirees’ financial security.”
This comes at a time when millions are already trying to navigate what they’ll receive, and when. Understanding how much you’re entitled to and when you’ll qualify has never been more important. For those planning ahead, it’s worth reviewing the latest state pension eligibility criteria and projected amounts.
While the debate continues, Britons approaching retirement are left wondering what their future looks like, and whether 80 is the new 66.
