Experts warn the State pension is unsustainable and approaching a crisis

The State pension is not sustainable, but there are no easy fixes, a report commissioned by the Society of Actuaries has concluded.

The report said that any fixes would throw up painful and potentially costly political dilemmas for the Government.

Cutting the level of State pension or lengthening the working age may nonetheless be required.

“Increases in the retirement age should be a part of the solution, but only provided life expectancy continues to increase,” the report written by consultants Milliman said.

“In addition, changing the approach to pension indexation appears the most promising option in terms of containing the projected growth in pension outgo, but at the cost of reducing pension adequacy over time.”

It said cuts to the State pension could be softened by bringing in what it describes as “a universal second pillar pension system”, but the financing costs overall of this new system to the exchequer would also need to be carefully assessed.

“The State pension system is unsustainable in its current form but there is no easy solution to improve its sustainability,” the report found.

The Society of Actuaries separately said that solutions must include securing a good income in old age to prevent poverty, and aim to avoid cutting other State expenditures, such as health and education programmes.

“The Society believes the issues highlighted by Milliman within the research paper need full and proper attention and debate,” it said.

“Action needs to be taken by policy makers to prevent a potentially severe situation arising in future.”