In December 2021, the Government announced the latest review of State Pension Age (SPA).

Currently, the state pension costs the Government over £100bn a year and has increased 3-fold since 2000. Any increase in the SPA could stop this cost from inflating even further, but to varying levels depending on how it is calculated.

Using life expectancy based on year of birth and the latest population projections, this presentation compares the timetabling and costs of four different methods of setting SPA between now and 2045:

• Having the same number of years in retirement as previous generations
• Keeping the ratio of people in work to those at or above SPA constant
• Spending a third of adult life in retirement
• Linking SPA increases to improvements in life expectancy:

All except one of the scenarios suggest the SPA may need to rise faster than expected, to ensure fiscal sustainability, support intergenerational fairness and keep up with increases in life expectancy.