As indicated by the chancellor’s grim Autumn Statement, official figures reveal that the cost of providing the UK’s aging population with state pensions will increase four-fold during the next 50 years if mandatory age increases for qualifying citizens are not brought forward.
Data collected from the Office for National Statistics is likely to strengthen the chancellor’s argument for increasing the state pension age to 68 sooner than originally planned and eventually increasing the age even further.
There is currently an estimated 12.3 million men and women over the state pension age across the UK. According to the data, the government spent £94bn in 2012-13 providing UK citizens with basic and second state pensions, winter fuel allowances, and pension credits to poor pensioners.
Based upon ONS future costs projections, this figure will eclipse £170bn in 20 years and reach a staggering £438bn by 2062-63.
When other benefits received by certain pensioners, such as disability living allowances and housing benefits, are added to the equation, the cost of providing pensions in 2012-13 rose to £110bn, and the overall figure is forecast to reach £491bn in 50 years, accounting for nearly 10 per cent of the UK’s GDP.
Currently, anyone retiring after 6 April 2010 must have 30 years of national insurance contributions built up in order to qualify to receive a full state pension. Prior to this, however, UK men and women needed 44 and 39 qualifying years respectively.
The ONS states that in September 2012, 80 per cent of male pensioners received their full basic state pension of approximately £105 per week. Only 46 per cent of female pensioners, on the other hand, received a full basic state pension.
Despite the recent rule change in 2010, which made it much easier for female citizens to accrue contributions, the proportions between the genders “have changed little compared to the previous year,” the ONS said.
“The difference between men and women is because many women in the current generation of pensioners failed to build up a full or near full BSP entitlement under the old system because of broken work histories and part-time work patterns,” it continued.
The ONS also added that some women chose to claim their pensions through their husbands, allowing them to receive up to 60 per cent of their partner’s payment without needing to file their own claim.
With more and more Britons reaching retirement age and more women working full-time now than ever before, the chancellor seems poised to corral the potential pension spending explosion as soon as possible.