Pensioners will make up a quarter of the adult population within the next 50 years because of improvements in life expectancy, according to an official review into the state pension age.
Suzy Morrissey, the independent reviewer, said that the number of people of state pension age or over was expected to rise by 55 per cent to 19.5 million by 2075.
The number of those aged over 85 is on course to increase from 1.8 million to 5.1 million in the same time frame.
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The proportion of those who are over the state pension age is forecast to rise from 22 per cent of over-16s to 28 per cent, while the cost of the state pension will rise from about 5 per cent of GDP to 7.7 per cent by the early 2070s.
The state pension age is 66 and is due to rise to 67 between next year and 2028, then increase to 68 by 2046. Previous governments have abandoned plans to bring the rises forward amid concerns about an electoral backlash.
Morrissey’s review will look at whether the state pension age should be linked to life expectancy to ensure there is “fairness between generations”. The review will also consider whether the state pension age is sustainable and compare the UK with other nations.
Sir Steve Webb, a former pensions minister and a partner at the consultancy LCP, said: “In the UK, changes to state pension ages have become highly politically sensitive, and this is likely to lead the new government to be cautious about further major changes.
Women can expect to receive far less than men once they retire
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“A much more aggressive timetable for moving to 68 or a timetable for making younger workers work to 69 or 70 seems unlikely. The problem for the chancellor is that although she would like to make the state pension system more affordable in the long-term, she would get a lot of political flak but no extra money to spend in the next decade or so, and that’s not a great combination for a politician.”
The government is not expected to increase the state pension age, regardless of the recommendations in the independent report. A government source said that doing so would be “electoral suicide”.
Ministers have also launched a pensions commission amid concerns that workers face a greater risk of poverty in retirement than their parents.
Experts have warned that people looking to retire in 2050 are on course to receive £800 per year less than current pensioners. The Department for Work and Pensions (DWP) said that 45 per cent of working-age adults were putting nothing into their pensions.
In 2005 the previous commission recommended automatically enrolling people into workplace pensions, which has caused the number of eligible employees saving to rise from 55 per cent in 2012 to 88 per cent.
DWP analysis suggested that 15 million people were not saving enough for retirement, and the self-employed, low-paid and some ethnic minorities were particularly affected.
About three million self-employed people are said to be saving nothing for their retirement, while only a quarter of people on low pay in the private sector and the same proportion from Pakistani or Bangladeshi backgrounds are saving. Women face a significant gender pensions gap: those approaching retirement are in line to receive barely half the income that men can expect.