Millions of people in the UK would have to wait/work longer to receive their state pension.
Retirement income costs are set to rocket by billions of pounds more than the country can afford, the new independent pension reviewer warned yesterday.
The State pension age is due to rise to 67 between 2026 and 2028, then rise again to 68 between 2044 and 2046. But with the State pension bill now set to soar by 39 per cent to £152billion a year by 2028, it is "inevitable" that the age increases will have to be brought in sooner.
And future changes could lift the pension age well above 68. John Cridland said in an interim report yesterday that the State pension "must be sustainable". The former CBI chief was appointed in March by the Government to review the age thresholds at which pensions kick in.
Financial planner Patrick Connolly warned last night that the State pension is unaffordable.
He said: "We have an ageing population which means there are an increasing number of people claiming the pension with fewer working people paying taxes to meet these claims."
Mr Connolly, of experts Chase de Vere, added: "The only practical solutions seem to be further increases in the State pension age, reducing pension benefits, the pension becoming means-tested, or a combination of these.
"We cannot rely on the State, or our employers, to provide us with retirement we hope for. We have to take this responsibility ourselves. "We are sleepwalking into a retirement time bomb."
He concluded: "The State pension, in its current format, is unsustainable."
Andrew Tully, pensions technical director at Retirement Advantage, added: "Set against a backdrop of an ageing society, costs for funding the State pension are predicted to rocket so something will need to give. Accelerating increases to the State pension age seems inevitable.
"We could also see recommendations for more flexible access to the State pension, like the pension freedoms available in private pensions.
"This could include early access for people wishing to retire sooner than a ‘nominal’ state pension age, due to ill health for example, but at a significantly reduced rate."
Richard Parkin, head of pensions policy at Fidelity International, warned that Mr Cridland’s review also "takes aim’" at the currenttriple lock pledge which increases State pensions in line with inflation, average earnings or 2.5 per cent, whichever is higher.
The review is the first to be conducted under the Pensions Act 2014 and is due to be completed by May next year.
Mr Cridland opened a consultation yesterday with a request to members of the public and pension experts to contribute before December 30 this year.
The possibility of getting early access to the new State pension for those who have had a long working life was raised in the report.
This might mean someone who started work at 16 and built up 50 years of national insurance contributions could become entitled to their pension at 66.
The consultation also seeks to find out more about how any State pension age changes affect the selfemployed, whether someone’s ethnicity affects their pension and pension outcomes for women.
Mr Cridland said: "The future of the State pension agee is a hugely important issue for this country. It must be fair and sustainable, and reflect changes in society.
"Whatever recommendations that I decide to make in my final report, they will be underpinned by the importance of effective communications about the State pension age.
"People need to be able to plan effectively for their own retirement."
A Government spokesman added: "We encourage people to respond to his call for evidence."
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