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Warning state pension age could reach as high as 90 as current policy is ‘unsustainable’ | Personal Finance | Finance

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Britons could soon be waiting until their 90s to claim their state pension as the policy becomes ever more unaffordable, an expert has warned.

Sam Roberts, director of Investment Consulting at Cartwright, told the Government will soon be forced to change the policy as it piles pressure on Treasury coffers.

Mr Roberts said: “The state pension promises made by the UK Government are mathematically unsustainable without explicitly reducing the benefits (such as increasing the state pension age sooner and faster) or implicitly reducing the benefits by creating inflation higher than the annual pension increases.

“The state pension age could in theory rise to maybe age 80 or 90. When it was first introduced, most people were not expected to live long enough to claim the state pension.

“However, the state pension age is a political decision and therefore a large rise seems highly unlikely. Having the Bank of England create more inflation therefore seems to be the easiest (and politically sneakiest) route.”

He said it will a sustainable state pension can probably only be achieved if the state pension age is above life expectancy which appears to be “politically impossible” as things stand.

The state pension age is set to increase to 67 between 2026 and 2028 and the to 68 between 2044 and 2046, with the Government considering bringing forward the move to 68.

Mr Roberts also warned that for a long time rising living costs have been outpacing the growth in the state pension, despite the increases delivered by the triple lock.

He cadded: “The UK money supply has increased by around on percent per year on average faster than the basis state pension over the past 10 years.

“That difference may not sound much, but it gradually adds up and then suddenly becomes noticeable (many pensioners are 10 percent poorer than they were 10 years ago) which is why we’re now seeing it highlighted in the press.”

Financial advisor Michael Dinich, founder of Wealth of Geeks, warned the 8.5 percent increase to the state pension in April may not cover the rising costs faced by pensioners.

He said: “We need a coordinated strategy between Government, industry and the third sector to tackle this pensioner poverty timebomb.

“As life expectancy increases, raising the state pension age incrementally is reasonable but should be balanced against healthy years lived.

“Regular independent reviews of the state pension age in line with life expectancy data are prudent. Abrupt, poorly planned changes erode confidence in the pensions system.

“We need a Retirement Commission to take a holistic view, balancing fiscal constraints against pensioners’ need for certainty in retirement planning.”

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