Many options for controlling costs but hard choices ahead

THE Government Actuary’s main forecasts suggest that, on its most likely scenario, National Insurance might need to increase for the average worker by up to £1,000 a year from the 2030s.

If all the shortfall in pension costs were to fall on the employee NI contribution, the rate might have to rise from 12% to Former Tory Pensions Minister is the maximum amount of state pension

17%. Of course, the money could be found by increasing other taxes instead.

Or the Government may have to reduce state support for pensioners. This would mean further cuts in future payments. The Government has reduced costs by increasing the state pension age and further increases are in the pipeline.

By the end of the 2030s, it is due to rise to 68 and the Government Actuary assumes it will continue to increase to 70.

If the age does not rise further, costs are projected to rise by twice as much – up

There will be pressure to squeeze pensions and raise taxes

STEVE WEBB FORMER LIB DEM PENSIONS MINISTER to 10 percentage points. That would take average NI contributions to nearly 22%.

Dropping the triple lock and increasing pensions in line with average earnings would radically reduce increases in costs.

Clearly, there are different ways to control the costs of state pensions and policy makers face difficult decisions.