Turner to back retirement age of 67
The government’s pension commission is set to recommend the official retirement age be pushed back to 67, it has been revealed.
A leak to the Financial Times suggests that this measure would be balanced out with a rise in the basic state pension from £82.05 to about £109 a week.
These changes would be delayed, with the retirement age starting to increase in 2020 – the date already set for a harmonisation of the retirement ages of men and women, which currently stand at 65 and 60 respectively.
However, the move is likely to be fiercely contested by unions, who are calling for compulsory savings and forced contributions from employers to fill Britain’s pensions gap.
Instead, the report will recommend an automatic enrolment for workers in a new national pension scheme. Employees and employers would pay about six per cent of salary into this, although workers would be able to opt out and invest in a limited choice of funds.
Adair Turner’s pension commission is set to release its full report into Britain’s so-called pensions crisis on November 30th.
In his interim report, Lord Turner pointed out that as life expectancies increase, and the number of Britons of working age compared with those over 65 falls, pensioners will become poorer unless action is taken.
The last report suggested that either retirement ages would have to rise, taxes increase, or people would have to save more to prevent this.
According to today’s leak, Lord Turner appears to have opted for a combination of all of these solutions.
The boost to the basic state pension will be supported by scrapping the state second pension, the FT reports, by turning it into a flat rate scheme closely aligned to the basic state pension.
Means-tested benefits on pensions, which already guarantee a minimum retirement income of £109 a week, would also be scrapped.
The leak comes just weeks after the government agreed to allow existing public sector workers to retire at 60, and shadow work and pensions secretary Malcolm Rifkind said this revealed the “huge inconsistency and inequality” that was making the pensions problem worse.
“[The prime minister] needs to find a coherent approach to dealing with a crisis that is largely of the government’s own making,” he said.
“The Labour government has contributed to the pensions crisis in this country by attacking the savings culture. The savings ratio has nearly halved since Labour came to power, from 9.6 per cent in 1997 to five per cent in 2005.
“Gordon Brown should be encouraging people to save. We need a combination of flexibility and incentives to help restore confidence in savings.”
