How Labour could take away your state pension

A report published this week by the London School of Economics calls on the Chancellor to raise the state pension age to 68 “as quickly as possible” to free up funding for police and mental health services.

The report warned that there are currently three people of working age for every person over 65, but that this is expected to fall to two people of working age by 2070. It called the ageing population “one of the greatest economic challenges of our time.”

Andrew Oxlade, of investment firm Fidelity International, said changes to the retirement age were “inevitably emotional”.

He added: “It is astonishing that in recent decades in the UK legislation has been passed to raise this age without any opposition.”

In addition to being highly unpopular, raising or bringing forward the retirement age may be unworkable if people are not healthy enough to continue working.

Official figures show that in England and Wales only 50% of adults aged 70 and over are free from disability and able to work.

Caroline Abrahams, of the charity Age UK, warned that raising the state pension age was a “terrifying prospect” for older people unable to work and that it would push pensioners into poverty.

However, postponing the retirement age is considered to be the easiest way to raise money for the State Treasury.

Raising the state pension age by one year in the late 2030s would save the government between £8 billion and £9 billion a year in today’s money, according to research by the Institute for Fiscal Studies (IFS).

Testing the means

One of the most radical reforms Labour could consider is “means testing” the state pension. This would mean that wealthier retirees would receive less or no benefit at all.

Ahead of the election, Ms Reeves insisted that Labour had “no plans” to introduce a means test for state pensions.

However, one senior adviser, Sir Edward Troup, said the Government should consider cutting powers to save money.

The Social Market Foundation think tank has called for a Royal Commission to review the future financial sustainability of public pensions and assess the feasibility of means testing.

However, experts warn that such a policy will have disastrous consequences for retirees and undermine the financial basis of retirement.