Cost of state pensions to quadruple over next 50 years

The cost of providing state pensions to the UK's ageing population is set to grow more than four-fold  to 9.4% of GDP by 2063.

Official figures from the Office for National Statistics have shown that if the government does not bring forward increases to the age at which people qualify for payments, official figures show.

The data is likely to strengthen the argument outlined by the Chancellor in his Autumn Statement for bringing the pension age forward to 68 more quickly than previously planned.

In 2012/13 the total pension bill to the UK Government for five million men and 7.3 million women over state pension age was £94billion.  

Future projections suggest this will rise to £170bn by 2032/33 and to £438bn by 2062/63.  The bill rises even further when benefits such as housing benefit and disability living allowance, are factored in.

The figures factor in the changes to the state pension in 2016 which will see the introduction of a single flat-rate payment to replace the current basic and second state pensions.

They also take into account alterations to the state pension age already in the pipeline, which will increase it to 66 by October 2020, 67 between 2026 and 2028, and 68 between 2044 and 2046.

However, they do not take into account the announcement in the autumn statement that the move to a state pension age of 68 is likely to be brought forward to the mid-1930s, with further increases to follow.

The ONS data also highlights the pensions gap between retired men and women, caused by big differences in working patterns between the sexes.

Anyone retiring since 6 April 2010 has needed to have built up 30 years of national insurance contributions to qualify for the full state pension, and prior to that a man needed 44 qualifying years and a woman needed 39.

The ONS said that in September 2012 just 46% of female pensioners received the full basic state pension of around £105 a week compared with 80% of male pensioners, and that 10% of women and 7% of men received less than half.

Despite the rule change in 2010 which made it easier for women to accrue enough contributions, the ONS said the proportions "have changed little compared to the previous year.

"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 said.

In addition, it added, some women had opted to claim the basic state pension through their husbands, which meant they were receiving a sum of around 60% of their spouse's payment without making a claim in their own right.

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