Three charts that show why increasing the state pension age is unjust – The Telegraph

The move could end up costing both retirees and the Government more in the long run
Hundreds of thousands of retirees breathed a sigh of relief when the Government finally committed to its “triple lock” policy last month, promising a record 10pc pay rise in the state pension next spring. But a sting in the tail has emerged: ministers are drawing up plans that could make workers wait longer before they receive state support.
Experts have warned that while increasing the state pension age is an easy way to save public funds, the reality is more complex – and could end up pushing thousands of people into poverty.
The state pension age was due to increase to 67 by 2028 and 68 by 2039, but policymakers are now considering plans to accelerate this to the mid-2030s. This could raise the Treasury tens of billions of pounds by pushing down the cost of paying the state pension and generating more revenue in income tax from people who have no choice but to stay in the workforce for longer.
The Telegraph breaks down the data to explain why a faster increase in the state pension age could end up costing both retirees and the Government more in the long run.
Proponents of a higher state pension age argue that it should move in line with an ageing population. In theory, this would keep the proportion of workers and retirees constant, so that the state pension system is never underfunded.
The most recent official data show that life expectancies dropped over the course of 2018‑20, for the first time since records began in the 1980s. But after stripping out the impact of the pandemic on the numbers, it remains clear that the long-term trend points to an ageing population in Britain. 
However, Steven Cameron of the pensions company Aegon noted that while people might be living longer, they might not be living healthier lives. Government expenditure on healthcare has been steadily climbing for almost a decade and the bulk of it has gone towards curative and rehabilitative care, according to the Office for National Statistics.  
Mr Cameron said: “The problem with increasing the state pension age is that many people simply cannot keep working to that age as a matter of health. That might be because a job is physically demanding or it could be mentally draining and highly stressful.
“It is difficult to keep working into old age and maintain your wellbeing at the same time. It could result in more elderly workers claiming health benefits.
“The cost savings for the Government might not be as big as they think.”
Alistair McQueen of Aviva, a pension provider, added that there would need to be stronger support systems in place for older workers returning to the workforce.
“If people are to be asked to wait longer for their state pension, they must be supported in working longer too,” he said. “Some may leave the employment market through choice, but others are forced to leave because of a lack of employment opportunities.”
History suggests that increasing the state pension age deepens social inequality across the country. The last increase in the state pension age disproportionately affected elderly workers in the poorest areas of Britain, according to the Institute for Fiscal Studies, a think tank.
This is because they are less likely to have sufficient private savings and therefore have no choice but to work for longer while they wait to receive the state pension.
When the state pension age increased from 65 to 66, one in seven 65-year-olds were pushed into income poverty as a result, the IFS estimated.
In the most deprived 20pc of areas in England, there was an 11 percentage point increase in the number of over-65s returning to work. That was more than double the wealthiest 20pc of areas, which recorded a rise of just four percentage points.
Mr Cameron added: “Life expectancy also varies drastically depending on which part of the country you are in. This means that those in poorer areas with the lowest life expectancy will receive less in state pension payments over their lifetime.”
He also noted that retirees in poorer areas might have to return to manual labour, which could add further strain on their health. 
Another fear is that unless the state pension increases, an ageing population will eventually lead to pensioners outnumbering the working population. 
This would make the state pension increasingly difficult to maintain, as it is funded by people currently in the workforce through their National Insurance contributions, rather than the money paid into the system by retirees.
However, official projections suggest that, while the gap will narrow over the next 100 years, the working population will still be bigger than the number of people aged over 65 – at a ratio of around two to one.
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