Britons may not be able to access their state pension until they turn 80 or pay 50 per cent in National Insurance contributions by the 2070s, an analyst has warned.
Financial projections indicate the state pension could consume approximately £200billion yearly, representing 7.7 per cent of gross domestic product (GDP) by 2073-74 according to official estimates.
Jack Carmichael from Barnett Waddingham has cautioned that even these figures may understate the true costs, suggesting annual expenditure could surge by an additional £8billion if longevity gaps narrow between different socioeconomic groups.
The International Longevity Centre has already proposed raising the pension age to 70 by 2040 to preserve the existing balance between working contributors and pensioners.
The state pension age could reach 80 without reforms, analysts warn
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These warnings emerge as the Government conducts a review of the state pension, launched last month under its new Pensions Commission.
Maxwell Marlow from The Adam Smith Institute warns the system could become unsustainable by 2037, when outgoings exceed contributions. He stated: "Our model shows this is on course to happen in 2037. That means that the account pays out more than it gets in."
The crisis timeline has accelerated, with economic analysts previously predicting sustainability issues between 2035 and 2045 now seeing problems emerge within twelve years.
Carmichael added "Employees are either going to have to contribute 50 per cent more to the state pension or [the Government is] going to have to change the system in some way.
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A major state pension payment error could impact your retirement | GETTY "The Office for Budget Responsibility's central forecast shows state pension expenditure climbing to 7.7 per cent of GDP within five decades, equivalent to roughly £200billion in current values.
More pessimistic scenarios paint an even bleaker picture, with high life expectancy projections suggesting costs could reach 8.4 per cent of GDP if 65-year-olds live an average of 29 additional years.
Carmichael argues these official projections remain too optimistic, particularly regarding life expectancy disparities.
He explained: "A more cautious approach would be to assume a closing of the life expectancy gap between the individuals with the lowest and highest life expectancy."
Marlow outlined three possible approaches to address the looming crisis. He said: "In terms of solving this, there are three different routes. Either a fundamental reform of how it functions, means-testing or whacking up the retirement age."
Fundamental restructuring could involve completely redesigning how pensions are calculated and distributed, whilst means-testing would restrict full payments to wealthier retirees.
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The Chancellor has supported a review of the state pension
| Getty ImagesThe third option involves dramatic increases to retirement ages, potentially reaching 80 years to maintain fiscal balance.
Carmichael suggested maintaining current GDP proportions would necessitate "a massive increase in the state pension age, potentially up to the dizzying heights of 80".
Chancellor Rachel Reeves has endorsed reviewing the state pension age timeline, stating it is "right" to re-examine proposed implementation dates.
Current legislation schedules the pension age to reach 68 between 2044 and 2046, though Baroness Neville-Rolfe has suggested accelerating this to 2041-2043.
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