State pension spending could rise to 9% of GDP
An ageing population could be a key driver in state pension spending nearly doubling its share of GDP in the next 50 years.
The Office for Budget Responsibility (OBR) has forecast a rise from 5% to around 9% in that period, according to its latest Fiscal Risks and Sustainability report.
The OBR said that with the UK population expected to live longer - with the median age rising from 40 to 49 by 2075 – there is likely to be increased pressure on public spending, particularly through higher health and state pension costs.
Currently, the OBR’s baseline scenario assumes that the state pension continues to be uprated by the triple lock, which increases payments by the highest of earnings growth, CPI inflation or 2.5%. Its alternative earnings-linked scenario would reduce debt by 2075 by around a 10th compared with the baseline.
The OBR report also noted that its forecasts are purely meant to be illustrations of long-term fiscal pressures and whether the public finances are sustainable under current policy settings.
It warned that, under almost all of its scenarios, public finances would move onto an unsustainable path with the onus on future governments to act accordingly.
In its baseline scenario, public spending is projected to rise from 40% of GDP in 2030 to 49% by 2075, with state pension costs one of the main upward pressures.

