In 1908, when Lloyd George introduced the first state pension, the qualifying age was 70. Average life expectancy for a man at birth was 49.
You can see the appeal. Promise everyone a pension at 70 when most of them won’t see 50, and the Treasury looks generous without having to actually pay for very much. It was, in the gentlest possible terms, a scheme that relied on its beneficiaries having the decency not to turn up.
They turned up.
By the 1950s, a 65-year-old man could expect another 12 years. By 2010, 18. Today’s 70-year-old has the cognitive function of a 53-year-old in 2000, and the employment rate of 65-to-69-year-olds has gone from under 10% in the 1980s to 28% now. The pension was designed for a world where retirement was a brief epilogue. We’ve turned it into a third act.
Which brings us to the triple lock.
Introduced in 2010, it raises the state pension each year by whichever is highest of earnings growth, inflation, or 2.5%. At the time, it was a sensible repair job — the UK state pension had drifted to embarrassingly low levels by international standards, and the triple lock dragged it back. Job done, more or less, by the late 2010s.
The triple lock has not stopped doing its job.
The Tony Blair Institute published a paper last week setting out the consequences. Spending on the state pension is on track to rise from around 5% of GDP today to 7.8% by 2070. In today’s money, that’s an extra £85 billion a year. More than the entire defence budget. To find £85 billion, you’d need to put VAT up from 20% to 29%, or cut the Department of Health’s budget by 40%.
The arithmetic is not subtle.
Now, none of the three main parties wants to talk about this, because pensioners vote and the maths is somebody else’s problem in 2070. At the last election, all three pledged to keep the triple lock. The Conservatives offered a quadruple lock, which sounds like something you’d buy from a particularly anxious locksmith.
The TBI paper proposes something more imaginative than the usual options of “raise the pension age” or “cut the pension.” It’s called the Lifespan Fund, and the structure is genuinely interesting: every year of work, study, or caring credits you with half a year of state pension entitlement, building over 40 years to a pot worth roughly £250,000 in today’s money. You’d be able to draw on it during working life — for retraining, caring, a stretch of unemployment — and rebuild it through slightly higher National Insurance when you’re back in work. At retirement, the pot converts to a guaranteed income for life, with the conversion rate calibrated to your actual health, not a one-size-fits-all retirement age.
The cleverest bit is the fairness argument. Under the current system, a 65-year-old man in Hart in Hampshire can expect another 20 years. In Glasgow, 15. The richer you are, the longer you live, the more state pension you collect. Reform that’s purely about raising the pension age makes that worse — it falls hardest on the people who were already getting less. The Lifespan Fund flips this: everyone gets roughly 20 years of support, regardless of how long they live.
Whether any of it happens is another matter. Reform of this scale needs cross-party agreement, a long transition, and a willingness to tell the electorate things they’d rather not hear. The first Pensions Commission, twenty years ago, managed it — that’s the bar.
What’s worth noting from where we sit is the direction of travel. Whatever happens to the state pension over the next two decades, the safe assumption is that it becomes less generous in real terms, less certain in its timing, and more conditional on individual circumstances than it is today. For most of our clients, the state pension is a rounding error in their retirement income. But the broader principle — that you cannot rely on the government to underwrite your later life on terms set decades ago — applies just as much to private pensions, tax thresholds frozen until the 2030s, and inheritance tax allowances that haven’t moved since 2009.
The £85 billion isn’t a bill you’ll personally receive. It’s a signal about which way the wind is blowing.
Plan accordingly.
Altor Wealth Management advises clients in Hook, throughout Hampshire, Surrey, Berkshire and beyond, and across the UK using the latest technology. This article is for general information only; it does not constitute tax, legal or financial advice. Pension and tax rules are based on current legislation and individual circumstances will differ.