State pensions handed out to future generations will be ‘derisory’, with cash reserves set to run out as soon as next year, a report has warned.
A ‘serious flaw’ in the national accounts will leave the Government short of funds to pay pensioners within the next year, according to the Centre for Policy Studies think-tank.
As a result, the Treasury will soon be forced to raid income tax receipts in order to keep up the payments, it said.
An academic at the CPS warned that the research shows the current level of state pension is ‘unsustainable’.
Michael Johnson called for urgent government action to prevent pensions being ‘watered down to a basic subsistence’.
He said the research suggested that the millions of taxpayers who are currently aged under 45 would face sharp tax increases and would have to wait longer to receive their state retirement income.
Those aged under 35 should prepare for state pensions to be scrapped altogether by the time they retire, he claimed.
An ageing population will see the state pension bill quadruple to £420billion over the next 60 years, official figures released this week show.
Mr Johnson told the Daily Telegraph: ‘It doesn’t matter which government is elected next year, the state pension age will have to go up much faster and sooner than anyone expects to cover the funding deficit.
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