Britons will have to work a lot more before they can claim the state pension under plans to save the government billions of pounds by raising the retirement age to 68 sooner than originally planned.
The current threshold of 66 will increase to 67 in 2028 and is due to hit 68 in 2046. The change will be brought forward by the ministers to as early as 2035, affecting those who are 54 and under today.
Jeremy Hunt is expected to make an announcement this year. The Sun, which first reported news of the discussions in Whitehall, said the chancellor favoured raising the retirement age to 68 in the mid- 2030s, but that Mel Stride, the work and pensions secretary, was pushing for 2042.
The government began a statutory review of the state pension age last month, with findings to be published in May. Ministers believe that the changes are necessary to make pensions affordable for the taxpayer given the ageing population. The Treasury's last rise saved about 5 billion dollars.
Critics said that the move would disrupt the plans of those already planning for retirement and could alienate voters at the next election.
Under the present law, it will hit 68 by 2046, although government policy is that it should happen by 2039. Ministers want to leave at least ten years between any change and its implementation, so 68 could be retirement age as early as 2033.
The state pension age saves the Treasury billions of pounds. According to pension experts, putting it at 68 a year earlier would save the taxpayer about 10 billion. LCP, a pensions consultancy, estimated that around 8 billion would be saved in state pension payments and at least 1.3 billion would be raised in taxes on extra earnings.
The move came after Britain's largest broker estimated that just one in three high earners with household income above 100,000 are on track to afford a comfortable retirement lifestyle.
More than one in seven households are on track to afford a comfortable lifestyle in retirement, according to Hargreaves Lansdown, Britain's largest broker. The figure is one in three for households earning 100,000 a year.
Comfortable retirement is defined as an annual income of 54,500 for a couple, as defined by the Pensions and Lifetime Savings Association. It would cover two foreign holidays a year and up to 1,300 per person for clothing.