Third State Pension age review – Intergenerational Foundation reponse

Rising longevity is something to celebrate. More people are now living longer lives thanks to higher living standards, medical advances, and healthier lifestyles. But an ageing population also creates significant challenges.

A smaller share of the population in work will tend to place downward pressure on economic output, and a rising old-age dependency ratio will add to the strain on the public finances. These pressures come at a time when the UK already faces high deficits, rising public debt, low growth, and stretched public services.

At the same time, inequalities between generations have also grown. IF research has shown that government spending has increasingly been skewed towards older generations. Over the past two decades, for example, per-person spending on pensioners has risen by 55% in real terms, compared to just 20% for children. The gap in overall government spending between children and pensioners has widened by 170% in real terms. Over this period, pensioner poverty has almost halved, while child poverty remains stubbornly high.

Younger generations are being asked to carry an increasingly unfair burden. They face stagnant wages, unaffordable housing, large student debts, and fewer public services and benefits, while funding more generous transfers for older generations. This situation is neither fair nor sustainable.

Restoring a fairer distribution of benefits and burdens between generations must therefore be a political priority. The State Pension plays a central role in this. As this submission argues, reforms to the State Pension age (SPa) are an essential part of a broader reform strategy to place the State Pension system on a fair and sustainable footing for younger and future generations.