Speculation of state-pension retirement at 74? OU expert gives us the truth

Posted on 24 July 2025 • Arts and social sciences, Society and politics

With recent reports suggesting that the state-pension age could be raised to 74 for future generations we asked Jonquil Lowe, Senior Lecturer in Personal Finance at The Open University, to tell us how this news came about and where the truth lies.

“Alarmist headline-grabbing” is the verdict from Jonquil as she says the press zoned in on something that was actually ‘what-if’ modelling from the last government-commissioned independent review of state pension age in 2023.

It was referred to this month in a new report from the Institute for Fiscal Studies (IFS) The Pensions Review: final recommendations and the media quickly latched onto it.

Jonquil says: “As the IFS reported, what the review actually said is that a pensionable age of 74 would be needed if the state pension Triple Lock continued indefinitely – which few experts think it will.”

Triple Lock hugely expensive

The modelling says that to keep public spending on the state pension below six per cent of national income, while retaining the triple lock, the state pension age would have to rise to 74 by 2068-69.

“The IFS was making the point that the Triple Lock is hugely expensive and that paying for it by increasing state pension age favours better-off longer-lived pensioners over those on lower incomes who tend to have lower life expectancy. So, the idea that age 74 will apply to future generations is unlikely,” says Jonquil.

So, what IS the Triple Lock?

It was the 2011 coalition government that introduced the Triple Lock – where the state pension increases every year in line with either inflation, wage increases or 2.5% – whichever is the highest.

As the table shows, the Triple Lock has ratcheted up the main state pensions to a higher level than they would have been had they just increased with earnings or price inflation, adding around £24 to £26 a week extra to the basic pension and £11 to £22 extra to the new flat-rate pension.

	Basic state pension / New flat-rate pension from 2016 (£/week)	Total percentage increase in basic state pensions 2010/11 to 2025/26
2010/11: baseline	£97.65 (basic)	–
2025/26: actual amounts under Triple Lock	£176.45 (basic) £230.25 (new)	80.7%
2025/26: what if pension only increased by earnings growth?	£152.13 (basic) £218.78 (new)	55.8%
2025/26: what if pension only increased by price inflation?	£150.73 (basic) £208.75 (new)	54.4%

Source: Jonquil Lowe

This has helped to raise many pensioners out of poverty, but as the IFS argues the Triple Lock should cease once the state pension has reached a socially acceptable target level and then raise the pension by either prices, earnings or a smoothed combination of both.

Fairness for different generations

Statutory periodic independent reviews inform any state pension age increases. The last review, by the Conservative government, recommended that around 31% of someone’s adult life should be spent in receipt of the state pension.

Jonquil says: “So, as life expectancy increases (which it is still doing albeit at a slower rate than in the past), state pension age would also rise. The government has just announced the launch of the third such review so we have yet to see if the 31% principle is retained.”

Savings for later life

“The DWP and IFS have both published reports this month on inadequacy of saving for retirement, especially because younger generations will be reliant mainly on Defined Contributions savings and more may end up as renters in retirement.

“Younger generations are more likely to be pension savers because of automatic enrolment but the amount being saved is currently low. However, how adequacy is measured is an inexact area.”

These reports will be food for thought for the new Pensions Commission that the government has set up to report on pensions adequacy by 2027.

Retiring later means bigger pension?

Jonquil says: “Perversely, of course, a later retirement age helps pension adequacy because it means people can save for longer. However, there are issues around being healthy enough to work, enough jobs being available and employer age discrimination (illegal but hard to prove or challenge, especially at the recruitment stage).”

She says the certain way of getting closer to an adequate pension is to save earlier and increase the amount you save: “Anyone from any age can have a personal pension scheme and anyone can pay into it, so you can even start a scheme for a baby.

“There is also a gender angle to this: women’s caring roles hamper their ability to build up pensions, so partners in paid work would ideally pay into their unpaid carer partner’s pension.”

Jonquil’s last word is this: “Whatever your situation, the bottom line is tuck cash away now in a pension whenever you can, from as young as you can, for as long as you can so you have choices in terms of whether you have to work until the state pension age, whatever that may be.”