People should retire at 70, say business leaders
People should work until they are 70 and receive a state pension of £110 each week, business leaders have said.
The Institute of Directors (IoD) has called for later retirement, a flat pension rate and an end to means testing.
Submitting proposals to the government’s pensions commission, the IoD also called for an end to “gold plated” public sector pension schemes.
The IoD accepts these measure will be hard to take for many, but insists that action must be taken now to prevent millions of pensioners facing poverty in retirement.
Earlier this month, public sector unions suggested there could be a strike of three million workers if the government tried to increase the age of retirement.
And these concerns were reiterated today by public sector union Unison. “Pensions are one issue our members feel very strongly about and rely on – especially when public sector workers don’t receive other benefits of those in the private sector,” a spokeswoman told politics.co.uk
And she suggested many in difficult jobs may simply die before they reach the new age of retirement.
But IoD director general Miles Templeman said that it was important to “start looking at some very strong medicine indeed to cure the UK pension problem”.
He continued: “Sacrifices have to be made by all of us here and now for the sake of future generations and the health of the economy. The government need to make tough decisions that not everyone will be happy with, but make them they must, sooner rather than later.”
The government-appointed Turner Commission into pensions reform has released four options, any or all of which can be used to reduce the current pensions savings gap.
Firstly that pensioners simply become poorer; secondly that taxes/national insurance contributions will have to rise; thirdly that savings must rise; and fourthly that the average retirement age must rise.
The IoD argues that to solve this growing problem there should be a gradual raising of the retirement age to 70.
The body also argues for an end to means testing for the state pension, by setting a new universal level at £110. It also suggests a closure of public sector benefit schemes to new entrants.
The plans are very similar to those released last week by the National Association of Pension Funds, which called for a flat “citizen’s pension” of £109 a week and the possibility of raising the retirement age to 69.
