The plans, announced in Osborne's 2013 Autumn Statement, mean anyone born after 1990 will have to work five years longer than at present to claim a state pension.
Osborne said that people should spend on average no more than one-third of their adult lives in retirement.
Under existing proposals, the state pension age will increase to 66 by 2020 and 67 by 2028. Today's announcement will see that increase to 68 by the mid 2030s, 69 by the late 2040s and 70 after 2050. The formula alteration is an attempt to address growing life expectancies.
A Government source said: "This is part of the government's long-term plan to secure a responsible recovery. It is a difficult decision to make sure there is a fair deal across future generations and that the country can live within its means.
"It will help make sure the country can offer people decent pensions in their old age in a way that with increasing life expectancy the country can also afford."
Too late, too slow
Hargreaves Lansdown head of pensions Tom McPhail criticised the changes for being "too late and too slow".
"Given current low levels of private savings and improvements in life expectancy, it was unrealistic for those in their 40s and younger to expect that they wouldn't see their State pension age rise again above age 67.
"In reality, many in work today are already unlikely to be able to afford to retire until their 70s, irrespective of when their state pension falls due."
Working longer, smaller pots
PwC says the state pension age rises means young people will have to accept they’ll be working longer than their parents.
"Even with millions of younger workers being auto-enrolled into a pension scheme, the younger generation can’t expect anywhere near as much from their employer’s workplace pension as their parents or grandparents," said Ed Wilson, a director in PwC’s pension team.
"PwC research shows that a new graduate being auto-enrolled on the minimum requirement is only likely to end up receiving a total of a third of their final salary as a pension, even after saving for their entire working life."
PwC estimates that someone born today would not receive a pension until they are 77 and those born in 2050 would need to work until they are 84 – a year more than today's life expectancy for British women.