Twenty-somethings face the longest wait for retirement

Teenagers and those in their twenties can expect to work to age 70 as the state pension age rises to cope with an ageing population and longer lifespans. The state pension age is already rising, but future increases in ages are yet to be set in stone.

Two reports published this week outlined ways in which the cost of the state pension could be brought down.

One report, by John Cridland, a former director-general of the Confederation of British Industry, also outlined ways in which future pensioners might be able to delay taking their state pension in exchange for cash.

One of Mr Cridland’s suggestions was that state pension age should rise to 68 between 2037 and 2039. At the moment, state pension age increases would reach 68 only by 2046.

He also said state pension age should not increase more than one year in any 10-year period, assuming that there are no exceptional changes to the data used.

The second report, by the Government Actuary’s Department, outlined in more detail how ages would rise based on increasing lifespans.

The state pension age is currently 65 for men and 64 for women. The latter will keep steadily rising every few months and equalise at 65 for men and women in 2018.

The state pension age will then increase every few months, reaching 66 by 2020. Then it climbs up to 67, with those born in 1961 and beyond the first to collect their pension at 67. The next scheduled increase occurs for those born in 1977 – so aged around 40 today – when again phased rises take it to the point where everyone born after April 6 1978 collects it from age 68.

The increases hinge on a basic equation - how much of our (increasing) lives we should be spending in receipt of a state pension.

There are two options: make no changes to a formula which triggers state pension age increases when an average person could be expected to spend a third (33.3pc) of their adult life in retirement.

Or, slightly reduce the “trigger point” from 33.3pc to 32pc. Under this method, those born after April 6 1986 would get their pension aged 70.