Scrapping state pension age increases will cost taxpayers £300bn, Royal London director of policy Steve Webb has warned.

In response to the leaked Labour manifesto, Webb predicted that the party’s plans to prevent any further increases to the state pension age beyond the age of 66 will cost taxpayers just under a third of a trillion pounds.

Webb explained that if increases were to be stopped, the planned rise from 66 to 67 due between 2026 and 2028 will not happen, nor will the planned rise from 67 to 68 due between 2044 and 2046. With this, assuming that around 650,000 people reach state pension age in any given year, he highlighted that the first of these changes will affect everyone who reaches the pension age between 2028 and 2046. This would impact around 650,000 people per year over an 18 year period, totalling 11.7 million people. “Assuming each person misses out on a flat rate pension of £8,000 per year in today's money that multiplies up to £93.6 billion” Webb explained.

In addition, the scrapping of the second planned rise would affect everyone who reaches state pension age after 2046. Webb noted that taking into account todays workers, from those 18 and over to 37 years old, this could result in 650,000 people per year over 20 years, approximately 13 million people. While each person would have two additional years of state pension, £16,000 each, this would result in a total of £208bn.

Overall, therefore the total cost amounts to just over £300bn, £301.6bn, and so this amount would essentially be added to national debt or found in some other way, Webb surmised.

"The cost of cancelling planned state pension age increases is astronomical. These are eye-watering sums of money which would either have to be found from somewhere or added to the national debt. As we live longer, it is inevitable that state pension ages will have to rise, as they are around the developed world. It is unrealistic to suppose that as a nation we can afford to ignore the fact that we are all living longer," Webb concluded.

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