The cost of state pensions is set to quadruple over the next 50 years, according to updated figures released by the Office for National Statistics.
State pension costs, including Pension Credit and the Winter Fuel Payment, are projected to increase to £170bn by 2032/33 and to £438bn by 2062/63 or 8.4% of gross domestic product, the ONS said. Without the upcoming move to the single-tier pension, long-term costs would have been even higher, it noted.
Current total expenditure on state pensions is £94bn - 6% of GDP.
Data from the ONS, Pension trends report published this week, is expected to reinforce the argument set out in Chancellor George Osborne’s Autumn Statement last week for raising the state pension age more quickly than planned to save £500bn over the next 50 years.
Actuaries Towers Watson noted that the projections for future spending on state pensions 'will undoubtedly have fed into the chancellor's decision last week to accelerate the increase in the state pension age'.
Senior consultant David Robbins at the firm said: 'There are two main ways of making state pensions more affordable in the long-term - don't pay them out for as long or cut the weekly amount. The government has done a bit of both: as well as increasing [state pension ages], it is introducing a single-tier pension that will be worth less than the old system for most young workers.'
He cited the Office for Budget Responsibility projections, published in July, which suggested state pension would rise to 9.1% of GDP without the single-tier reforms.
'It also thinks that this 8.4% number could come down to 7.5% if the "triple lock" were abandoned and pensions uprated only in line with average earnings growth,' Robbins said.
The ONS figures also highlighted that the current state pension was paid out differently to men and women.
'A larger proportion of men than of women receive the full basic state pension: in September 2012, 80% of male pensioners received full BSP compared with only 46% of female pensioners.' Average net income received from state pension increased by an estimated 14% for men and 23% for women between 2003 and 2013.
