State pension age might soar to 75 because of low beginning charges, examine suggests – consultants give their verdict

Children at school now might have to work into their 70s because not enough babies will be born to pay their state pensions, says a new study.

There might only be two working age people to support every one pensioner if births continue to fall, compared with four to one in the population in 1970, it estimates.

By last year there around three and a half workers to one pensioner, and to sustain the ‘old age dependency ratio’ at this level it reckons the state pension age would need to reach 75 by 2093.

‘Worse still, in the coming generations this is set to plummet to 2:1,’ says the report by the Centre for Social Justice, a think tank which aims to combat poverty.

‘It is one thing for the costs of a retired person’s pension, care and health services to be split between four working age people. It is quite another for the burden to be shared by just two.’

The new study drew a mixed reaction, with one expert saying increasing the state pension age to 75 for current school-aged children was ‘alarming’ and would exclude many people from receiving it at all.

Another said it was not likely, because people from all walks of life rely on and value the idea of having a state pension in the future, and the Government has other levers to pull to afford it – read their views in full below.

The state pension age is currently 66 and is about to rise to 67, but could it really soar to 75 or even above due to a falling birth rate or for other reasons? Here’s what you need to know.

When will the state pension age rise to 67?

The state pension will be worth around £12,500 a year from next month if you have paid enough National Insurance to receive the full amount.

The age you can start receiving it will soon start rising from 66, with a month added to the qualifying age every two months from April 2026 until April 2028, after which everyone will reach pension age at 67. See the table below.

The next increase to age 68 is still up in the air. Officially, it’s scheduled to happen between 2044 and 2046, which would affect those born on or after April 1977 – people who are about to turn 49 and younger.

The Government is required by law to review the state pension age every six years, so it has ordered two further state pension reports – one by its in-house actuary and the other by an independent expert – which will look at when the retirement age should rise to 68.

The Government has effectively, if not in so many words, told the experts working on the next two reports to operate under the assumption that the triple lock pledge will remain in place indefinitely.

This means that the state pension increases every year by the highest of inflation, average earnings growth or 2.5 per cent. The Government has promised to stick to the triple lock for the whole of this parliament.

But the Institute for Fiscal Studies has explored how affordable this is and suggested the state pension age would have to rise to 69 by 2048–49, and then jump to 74 by 2068–69 – which would be bad news for people in their 30s and younger now.

Jack Carmichael, a senior actuary at consultancy Barnett Waddingham, warns younger generations could face a state pension age of 80.

He says the cost of paying for the state pension could far exceed the Government’s independent number crunching.

‘There’s a genuine possibility the state pension age could one day push towards 80, and it’s not scaremongering – it’s simple maths.

‘This wouldn’t hit today’s pensioners – it’s a long-term issue. But unless we face up to the true scale of how long people are living and what that means for the cost of paying out state pensions, younger generations could be looking at retirement ages that feel completely out of reach.’

Meanwhile, the minimum pension age for accessing workplace and other private retirement savings is due to rise from 55 to 57 from April 2028.

Governments have in the past tended to keep the state pension and private pension ages roughly 10 years apart, so any future increases could well continue to happen in tandem.

How the state pension age could hit 75

What impact is falling birth rate having?

‘Ultimately, the UK tax burden is shared among proportionally fewer people each year, even as costs increase as Baby Boomers head into old age,’ says the Centre for Social Justice.

‘Currently too few babies are being born to maintain the future of our economic model. Without intervention the UK faces poverty, inflation, and sector shortages.’

In its Baby Bust report, the CSJ notes that in 2024 the UK’s Total Fertility Rate – the mean number of children per woman – fell to 1.41, a record low. But it says the TFR has been below the replacement rate, which is 2.1, since 1970.

The CSJ says declining birth rates have not been caused by mothers having fewer children, with the average family size remaining remarkably similar since the 1970s – what has changed is the number of women who never have children at all.

‘In 1970, the female childlessness rate reached as little as 5 per cent but this is estimated to have risen to around 30 per cent for the current cohort of young women as of 2022.’

In addition to looking at how this might impact Government policies like the state pension age, the CSJ probed ways to address the falling birth rate – offering the following list.

– Marriage should be prioritised

– Adulthood should begin earlier, especially for men

– Motherhood should be properly valued

– ‘Baby Boomer’ politics must be addressed

– Incentives and benefits should be conditional

Regarding Baby Boomer politics, the report says: ‘Following economic liberalisations of the 1970s, the asset price boom has delivered extraordinary wealth to the Baby Boomer generation, at the same time making it almost impossible for many young people to buy homes.

‘As the OADR [old age dependency ratio] shifts, people of working age are expected to spend more and more of their taxes on the growing costs of pensions and age-related health and social security costs.

Yet, anecdotally, many Baby Boomers do not recognise this generational inequality, and baulk at any suggestion that pension spending must be brought under control.

‘It is also difficult for some to understand just how much more expensive family life is today compared to a generation ago (when houses were cheaper and marriage and child tax allowances boosted family income).’

The CSJ says this creates a difficult political situation, as any re-allocation of state spending to young people is likely to be unpopular with Boomers who are perhaps the most powerful voter demographic.

But it says this must be addressed if we are to make any progress with family formation and fertility, and help people understand that without future taxpayers there will be no more state pensions or health care

‘We should push back the retirement age. This is, of course, unlikely to alter the fertility rate. But shifting the length of time that people work for, aligning it more with healthy life expectancy, will at least contribute to a positive shift in the OADR.’

On incentives and benefits, the CSJ cites a measure in Hungary where maternity benefits were reformed to be in line with earnings in the first six months of pregnancy, rather than the previous 12 months of work, which resulted in a much greater incentive to report higher earnings.

This increased tax receipts in the long term and resulted in nearly half the women benefiting from the same higher wage post-maternity leave, it says.

What do money experts say? Raising state pension age increases poverty

There are other levers open to the Government beyond continually pushing back the state pension age or maintaining a very fixed dependency ratio like the one described above, according to Patrick Thomson, an expert at Standard Life.

There needs to be a greater focus on longer working lives, and the provision of training and flexible work, while another lever is private pension provision and helping people to save more, he says.

Thomson, who is head of research analysis and policy at the Standard Life Centre for the Future of Retirement, adds: ‘I don’t believe a state pension age of 75 in the future is likely.

‘The state pension is one of the most popular parts of our social security system, and people from all walks of life rely on it and value the idea of having it in the future.

‘Projecting forward to what the world will look like, how we will be working, saving and retiring in the year 2093 is not something I’d try to be too precise about.’

Thomson goes on: ‘Simply relying on raising the state pension age to curb spending levels ends up falling most heavily on those in poor health and in more deprived parts of the country, who are least likely to be able to work for longer, or to benefit from many years of receiving their state pension.’

He says the last time the state pension increased it led to a doubling in the rates of poverty for 65 year-olds, and there is a real issue of pre-retirement poverty.

‘Raising the state pension age without other support for people’s work, health or income is going to make that worse.’

People with lowest life expectancy suffer most from state pension age rises

‘State pension payments are made on a ‘pay as you go basis’, paid for by general taxation and National Insurance contributions made by the working age population,’ says Aegon’s head of pensions Kate Smith.

‘Fewer working age people and an increasing pensioner population means that something has to give.’

But she notes that the state pension age is already pencilled in to increase to age 68 in the early 2040s.

‘Increasing it to age 75 for current school-aged children is alarming. Average healthy life expectancy and average life expectancy vary across the UK, reflecting socio-economic conditions and opportunities.

‘Those with the lowest life expectancies would suffer most from an increase in state pension age.’

Smith warns: Unless the UK sees substantial increases in both healthy life and life expectancy, raising the state pension to age 75 would mean more people are excluded from receiving the state pension, especially those from lower socio-economic backgrounds.’