"If you want to freeze the state pension age at 66 and keep the changes cost neutral, you’d have to cut the state pension for every individual from £8,000 a year to around £7,200."
Hargreaves Lansdown added that if Labour want this state pension age plan to be cost neutral, they’d have to cut the state pension by £800 a year.
Under the manifesto proposal, the planned rise from 66 to 67 due between 2026 and 2028 and the rise from 67 to 68 between 2044 and 2046 will not happen.
Steve Webb's calculations show that the first of these changes will potentially affect everyone who reaches pension age between 2028 and 2046, who would receive the state pension at 66 instead of 67.
This would impact roughly 650,000 people per year over an 18 year period, so 11.7 million people in total. 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.
The second of these changes could affect everyone who reaches pension age after 2046. Considering just today's workers (i.e. those aged 18 or over), this could be all those aged 18-37. This would be 650,000 people per year over a 20 year period, or roughly 13 million people. Each person would gain two years' worth of state pension or £16,000 each which would mean a total of £208 billion.
Steve Webb said: "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."
Tom McPhail, head of policy at Hargreaves Lansdown, added: “You have to put these numbers in context: the state pension costs around £100 billion a year and these projections roll out over the next 30 years, so this analysis involves a total cost in today’s money of around £3 trillion. In other words these Labour proposals would increase the state pension costs by around 10%. If you want to freeze the state pension age at 66 and keep the changes cost neutral, you’d have to cut the state pension for every individual from £8,000 a year to around £7,200.”
