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Last Updated: Tuesday, 27 September 2005, 12:31 GMT 13:31 UK
Q&A: Raising the state pension age
Old person
The state pension age may rise
There have been a flurry of calls for the state pension age to be raised. One report even suggested that people should remain in work until they reach 70.

BBC News examines some of the arguments for and against raising the state pension age.


What are the current rules for getting a state pension?

At the moment men receive their pension at the age of 65 and women at 60.

The current payment for single pensioners is 82.05 a week, while a married couple receives 131.20 a week.

These figures assume full National Insurance contributions.

But the pension age for women is already going to be raised by five years. This means that women will also have to retire at 65. This change will be phased in between 2010 and 2020.

Who thinks we should work even longer until we retire?

A variety of organisations have demanded this.

The National Association of Pension Funds has suggested a pension age of 67 by 2030, rising to 69 years of age by 2040.

In its view that would help pay for the cost of increasing pensions in line with earnings, rather than the less generous policy which operates now of putting them up in line with inflation.

The Institute of Directors has demanded that the pension age be put up to 70 by 2035. The CBI, too, has called for people to retire later.

What is the problem, exactly?

There's a widespread belief that pension reform is necessary because, on average, we are living longer. This means that money set aside for pensions has to be paid out over a longer time.

For instance, the amount of money paid out in basic pensions last year was 47bn. So if we continue to live longer it becomes very expensive for the government to finance the extra payments out of taxation.

Are we really all living longer?

The statistics suggest so.

According to the Government Actuary's Department, in 1981 a man in the UK aged 60 could expect to live for, on average, an extra 16.3 years.

By 2003, that had increased by 3.8 years to 20.1, giving an average life expectancy of 80.1 years.

For 60-year-old women, the comparable increase over the same period has been two and a half years, giving an average life expectancy of 83.3 years.

What does the government think?

Both the Chancellor Gordon Brown and the Work & Pensions Secretary David Blunkett have said that an increase in the pension age to 67 years should be debated.

Mr Blunkett said it was not a panacea on its own. But on a recent trip to the United States he was clearly struck by the fact that a state pension age of 67 is going to be phased in there.

What are they waiting for?

One thing the government is waiting for is the final report of the Pensions Commission, led by Adair Turner. Last year, one of its suggested options was that all people, not just state pensioners, should expect to work longer or face greater poverty in retirement

Are the trade unions very upset at all this?

Yes. Some of them, especially those with members in the public services, have already banded together to threaten the biggest industrial dispute since the General Strike of 1926.

They are worried about changes to their own specific occupational schemes: e.g. those for civil servants, local authority workers, firefighters, teachers and NHS staff.

Didn't the government back down on this idea earlier in the year?

A threatened strike by civil servants and local government workers just before the last general election made the government pull back from plans to raise the retirement age for many of its own employees.

It still wants to do this, typically by raising the standard retirement age of the various public service pension schemes to 65 years. But they operate quite separately from the state pension system.


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