Top News

The Government has been told a state pension age rise to 70 may be "necessary" by a leading research foundation, which recommends increasing the age and overhauling the current model to mirror a system used in the Netherlands.

The Intergenerational Foundation, an independent research organisation promoting fairness between generations, has recommended that the Government increase the State Pension age ahead the third state pension age review. They have suggested that men and women across the country should receive their pension at 70 by the year 2035.

According to the research organisation, "inequalities between generations have grown" as they claim Government spending per person on pensioners has risen by 55% and only 20% on children in recent years.

The foundation's report stated: "One option could be to increase the State Pension age to 70 by 2035. Based on the 2022 Office for National Statistics cohort life expectancy projections, this would reduce the average period of retirement to around 16 years for men and 19 years for women.

"By contrast, under the currently legislated timetable, the average retirement period would be around 19 years for men and 22 years for women. While such reforms would undoubtedly be politically difficult, they may be a necessary part of a broader package of measures to prevent a future debt crisis."

They suggested that the increasing cost of the State Pension triple lock is "not only unsustainable but also unpredictable" in its current shape. The triple lock means that state pension rates are increased every year, based on whatever factor is highest. Factors include average wage growth, the rate of inflation or a flat rate of 2.5%.

It's reported by the Office for Budget Responsibility that the triple lock mechanism will cost the Government £15.5 billion a year by 2029-2030. This is three times the amount that was forecasted when it was first introduced in 2011.

The foundation also called for the current pension system to be overhauled and replaced with a scheme which is similar to the Netherlands' two-thirds model. This would mean employers pay two-thirds of pension contributions, with the employee paying the remaining one-third.

Currently, the state pension age is 66 for men and women across the country. It's set to rise to 67 between 2026 and 2028, depending on when the retiree's birthday falls. A further increase to 68 is due to be implemented between 2044 and 2046, but a review could see this brought forward to the late 2030s.

The Government is required to review the state pension age every six years, under the Pensions Act 2014. The current review started earlier this year in July and is due to finish in 2029. It will have a lasting impact on millions of people approaching retirement age and their savings.