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Increasing the state pension age well beyond today’s level is an option as life expectancy rises, a savings expert has warned.
And it could have a “disproportionate impact” on some Britons, an expert has warned.
There has recently been discussion of the idea of raising the state pension age up to 70 as the policy becomes ever more expensive.
Mike Ambery, retirement savings director at Standard Life, part of Phoenix Group, said: “Currently 66, the state pension age is set to rise to 67 between 2026 and 2028 and a further increase to 68 is planned but no date confirmed.
“If life expectancy increases over the coming years, and twin pressures of squeezed public finances and an ageing population continue, raising the state pension age higher and into the 70s is an option.”
Legislation is currently in place for the age to increase to 67 in stages between 2026 and 2028 and then to 68 between 2044 and 2046.
Mr Ambery warned that hiking the state pension age could affect some people more than others.
He explained: “It would, however, be extremely unpopular and would disproportionately impact the poorest in society, who are most dependent on the state pension and often have shorter life expectancy.”
Another pensions expert warned hiking the state pension age could drive inequality.
Lizzy Holliday, director of Public Affairs and Policy at NOW: Pensions, said of increasing the state pension age: “The Government will need to look at whether there are unequal impacts across different types of workers, or different parts of the country.
“They will also need to look at whether the right help is available to enable working into older age – such as health and disability support in the workplace and occupational health provision. This could also have wider beneficial impacts for all ages and employment levels across the population.”
Mr Ambery said another option for the Government in its efforts to keep the state pension affordable is to change the triple lock.
He explained: “The Government could row back on their triple lock commitment and perhaps remove the average earnings element, so the state pension would only ever rise with inflation.
“Or, they could consider means testing – other countries like Australia which has a similarly ageing population has taken this route but mandated higher private pension contributions from employers.
“Undoubtedly, both these options would prove socially and politically sensitive and any change would need to be carefully considered, balanced and taken as part of a review of people’s retirement savings in the round.”
The full new state pension currently pays £221.20 a week while the full basic state pension is £169.50 a week, although many people do not get these full amounts.
With the prospect of a higher retirement age, Mr Ambery also said it’s important to have the proper support in the workplace to help people work longer.
He explained: “Clearly, longer working lives are a highly likely in the future and there’s a role for both government and employers to help people prepare.
“This should involve emphasis on good work and encouragement of age-inclusive employment practices, particularly to support workers who need or want flexible working arrangements later in their careers or who need support to manage a health condition or caring responsibilities alongside work.”