State pension age 'must be raised to 74 or triple lock axed' in dire warning to savers

Fears are mounting that the retirement age could rise to 74 amid warnings about spiralling triple lock pension costs. The triple lock promises to raise the state pension each year either in line with inflation, wage growth, or 2.5%-whichever is highest-but experts have warned these costs will spiral, meaning future generations may have to pay the price.

The Office for Budget Responsibility (OBR) said the triple lock is now projected to cost three times the original estimate by 2030 with an ageing population, which would be £15.5billion annually. This followed a warning by the Institute for Fiscal Studies (IFS) that without a triple lock reform, state retirement age could rise to 69 by 2049, and to 74 by 2069, impacting those born in the 80s and 90s.

Richard Hughes, chair of the OBR, said the triple lock "is one of a series of age-related pressures that pushes public spending upwards steadily over a number of years".

He warned that "public finances are in an unsustainable position in the long run" with pensions, health care, and age-related spending increasing.

He added that the UK "cannot afford the array of promises that are displayed to the public" if they remain unchanged and the economy grows as expected.

Baroness Ros Altmann also told the Daily Mail that the retirement age should not be increased again, but warned that the triple lock was "not sustainable" in the long term.

Concerns have emerged as the government prepares to review the state pension, which the Work and Pensions Secretary Liz Kendall announced on Monday, July 21.

The current state pension retirement age of 66 is already set to rise to 67 between 2026 and 2028. An increase to 68 is also pencilled in for 2046.

The last two reports in 2017 and 2023 recommended bringing forward the increase to 68, but the Conservative government did not do this.

When the review was announced, Rachel Reeves said it was "right" to assess state pension age. She told reporters: "As life expectancy increases it is right to look at the state pension age to ensure that the state pension is sustainable and affordable for generations to come."

The potential rise for those born in the 80s and 90s follows warnings from experts that people looking to retire in 2050 could receive £800 less annually than current pensioners.

The OBR said the cost of the state pension has risen steadily over the past eight decades, from around 2% of the UK economy to a current 5%, equating to £138billion.

The review by government into the new state pension age should be finished by 2029.