Yahoo Finance State pension age needs to jump to 71, says think tank
The UK state pension age needs to rise by around four years to 70 or 71 as early as 2040 in order to maintain the status quo of the constant number of workers per state pensioner, a longevity-focused think tank has claimed.
At the moment, anyone born on or after 6 April 1977 will have to work to the age of 68, and there’s still the chance that date could be brought forward, which means there will be some people who may not be able to work up until they get their state pension.
According to the International Longevity Centre’s (ILC) Healthy Ageing and Prevention Index, poor health is one of the key reasons for workers dropping out of the work force and is one of the greatest barriers to economic prosperity faced by the UK today because it lowers economic output and increases taxes.
While we are facing ill health earlier in our long lives, the problem becomes even more pressing, the think tank said.
The index, which ranks 121 countries against the six indicators of life span, health span, work span, income, environmental performance, and happiness, found that countries that ranked higher have rapidly ageing populations, making it increasingly important for these governments to act to support healthy ageing.
At a pension age 65, a ratio of 20% equates to five workers per retiree but a ratio of 50%, which is projected for at least 20 countries on the Index by 2050, means just one worker per retiree.
Read more: Why you aren’t getting a full state pension and what you can do
For the UK, the recent stalling in life expectancy during the austerity years and COVID pandemic has temporarily eased the pressure for increases in state pension age beyond 67 after 2027. However, in the longer-term, the pressure will be on to increase it to 68 or 69 before that.
Recent figures revealed there were over half a million people in the UK aged 90 or over in 2022 and more than 15,000 people aged 100 or more. This number has doubled in 20 years. The ranks of centenarians are still dominated by women, but men are catching up. Twenty years ago, there were 8.2 women over 100 to every man — now it’s 4.5.
It means that despite all the health challenges thrown at us in recent years, we’re defying them all, and men and women are living to a ripe old age.
The problem with a higher state pension age
The ILC says that raising the pension age is one solution, but this is challenging — for example, research shows that by age 70, only 50% of adults are disability-free and able to work.
If the proportion of the economically active population were to increase from current levels of around 78% to 85% then it may be possible to hold the state pension age at below 70 from 2040 — at least for a few years.
Watch: UK urged to reform pensions triple lock by OECD
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