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Public expenditure on state pensions is projected to increase by nearly 2 per cent of gross domestic product by the middle of the century, according to forecasts from the Pensions Policy Institute.

Forecasts from the PPI’s aggregate model revealed state pension expenditure was set to rise from 4.5 per cent in 2005 to 6.3 per cent in 2051 and public expenditure on long-term care was projected to increase by nearly 1 per cent of GDP by the middle of the century.

Rising longevity and an ageing population have raised concerns about future affordability of the long-term care system, with official figures from the PPI showing that the number of people aged 85 and over will increase from around 1.2m in 2006 to 4.9m by 2051, representing an increase of nearly 300 per cent.

Under the current system, state spending on long-term care would need to double in real terms over the next 20 years just to keep pace with the growing number of older people and the rising costs of care provision.

To help combat the problem of underfunding, the PPI has announced its New Dynamics and Ageing Population programme would be funding new research into pensions and long-term care through the research group Modelling Ageing Populations to 2030.

The project is due to be completed at the end of next year and brings together research experts from the London School of Economics, University of East Anglia, University of Leicester and the London School of Hygiene and Tropical Medicine.