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Last Updated: Thursday, 17 November 2005, 15:39 GMT
Pension age 'should rise to 67'
Pensioner in a Post Office
The basic state pension may be given a significant boost
A rise in the basic state pension and an increase in the age at which it can be claimed is to be recommended by the Pensions Commission later this month.

The commission's report will call for a more generous state pension but a rise in the claimant age to 67, according to the Financial Times newspaper.

A new national savings plan, in which individuals will automatically have to enrol, will also be recommended.

The commission has been tasked with finding a blueprint for pension reform.

A Pensions Commission spokeswoman said the newspaper article was speculative and that it would not be commenting ahead of the report's publication on 30 November.

Higher state pension

According to details of the report obtained by the FT, the commission will call for a generous rise in the state pension.

This should rise from the current 80 a week to closer to the 109 a week paid out through the means-tested minimum income guarantee.

To pay for this increase, the report will recommend that the age at which people can claim the state pension should rise from 65 to 67.

I certainly think that this kind of headline is not going to go down very well
Dr Ros Altmann, pensions expert

The proposals, to come into force after 2020, would affect everyone currently under the age of 50.

There is also a suggestion that the Turner Commission has been discussing scrapping the State Second Pension scheme to help pay the cost of their proposals.

National savings plan

The report will also call for the creation of a new national savings plan, modelled on a scheme currently being set up in New Zealand.

People would join when they started a new job, with contributions, possibly from both workers and employers, being collected by the Revenue & Customs through the PAYE scheme.

The Prime Minister and the government are going to find it very difficult
Malcolm Rifkind, Shadow Work and Pensions Secretary

Laura Cronin, an adviser to the New Zealand minister of finance, told BBC Radio 4: "The scheme makes it easy for people to save because lots of us find it difficult to sign up to pension schemes even when we do want to save.

"A scheme like this works to encourage people to save by making it simple for them to do so. We need to find a way to supplement people's incomes in retirement."

KiwiSaver is being introduced because New Zealand has some of the same problem as the UK - low levels of savings combined with an ageing population.

Their new scheme will channel the extra contributions into investment funds, just like occupational pension schemes.

Ms Cronin pointed out that although individuals would be enrolled automatically, they would still retain the right to opt out:

"It does give people the opportunity to opt out if they've got a mortgage or other commitments or debts, or if they've already got other kinds of savings."

Mixed Reaction

One pension expert said any proposal to raise the state pension age would be unpopular.

"I certainly think that this kind of headline is not going to go down very well, especially after the recent deal we have seen for public sector pensions," Dr Ros Altmann, pensions expert at the London School of Economics, told the BBC.

The government recently backed down on plans to raise the retirement age for current members of public sector pension schemes for civil servants, NHS staff and teachers.

Instead it agreed to bring in a later retirement age for new joiners only.

HAVE YOUR SAY
Perhaps if pensions were safe from greedy politicians it would encourage more of us to save
Kyle R, Cardiff

Shadow Work and Pensions Secretary Malcolm Rifkind said that having just given in to the unions on public pensions, "the Prime Minister and the government are going to find it very difficult" to sell this plan to the public.

But TUC General Secretary Brendan Barber said that there was a broader point beyond any detailed proposals - and it was a matter of political agreement.

"Will ministers have the political will to make the radical changes necessary to solve the pensions crisis? Will they take the measures necessary to ensure that the millions of people in work today can look forward to a decent pensions when they retire?"

Meanwhile, Age Concern warned that raising the retirement age could hit the poor hardest and widen the gap between rich and poor.

"It could particularly affect those on low incomes who rely most on state pensions and tend to have lower life expectancies," said Neil Churchill, Age Concern's director of communications.

However Alan Pickering, who wrote a previous government report on pensions, welcomed the pensions commission's reported recommendation to raise the state retirement age to 67:

"It's an essential pre-requisite of modernising the pension system," he said.

"It's a good thing to put the nation on notice that by the 2020 decade we will be getting a bigger state pension but will have to wait a bit longer to get it."


Would raising the pension age help solve the pensions crisis? Would you be happy to work until 67?

Raising the State pension age is necessary but savings into a central fund must be administered properly and not be squandered by spendthrift governments.
S. Hodson, Warrington, Cheshire, UK

I think the government has backed itself into a corner over the recent agreement on public sector pensions. Workers in the wealth-creating private sector will not accept this proposed double standard.
Hugh Fenton, Crowborough, England

NO. We should not work until we are 67 I have been working and paying towards my state pension for 42 years. In all that time successive governments have take my money each month and spent it. If the government had invested our money in the same way as occupational schemes do, our pension would be safe. But instead they have spent it all. If politicians and senior civil servants can have big pensions then we all should have one.
Brian McDonald, Liverpool

I am incensed over what I hear, it's on a par with the Poll Tax , petrol riots and double digit increases in Council Tax. It will cause unrest and civil disobedience at least; any shadow political party worth their salt could ensure their success at the next poll and commit to maintaining pensions at 65. Remember the MPs' pension scheme is by far the most generous of the LOT - so use your VOTE!
Rod, Oswestry, UK

When I started work at 19, I was NOT ALLOWED to join my company pension scheme until 21, and had the expectation of a state pension at 60. Now I am 41, have a stakeholder pension, a frozen company pension, and a possible state pension at 67 - how many times will age limits increase before I get there? Will it be worth anything when I do, and will they still be topping-up those on low incomes using my money?
Mrs H Beever, Chippenham, Wilts

It is time people started living in the real world. Life expectancy is far greater than when the 65 year retirement age was set. The country cannot afford to have a dwindling working population supporting an increasing retired population. How civil servants have managed to retained their wildly unaffordable "final salary" schemes is beyond me - this needs to be addressed.
Jonathan Hart, Farnham, Surrey

I'm resigned to working forever. We haven't been producing enough children so we have this strange demographic bulge that skews the average age to over 50 and, I gather, that's increasing.

The way forward is to make everyone responsible for their own retirement saving and drop the government pension. This would have to be done over a period of years (30 or 40 possibly) but we would end up with a self sufficient society.

The bottom line is that our are demographics can no longer support the way we used to live when there were lots of youngsters around and a change in the way we retire, and plan retirement is long overdue.
Zorba Eisenhower, UK

Compulsory pension contributions are an excellent idea but there should be no opt-out clause as this will lead to those who have saved also having to pay for unfunded benefits for those who opt out and reach pension age with no provision.
Adrian James, Ormskirk Lancs

Happy or not, this kind of action is needed (and probably another rise in the retirement age a decade later). The only issue will be whether anyone will employ these people. We also need to abandon means tested pension payments as they only serve to discourage people from saving for their retirement.
Keith Walker, Stafford, UK

How would this solve the pensions crisis? What is the point of 'Pension Credits'? If someone is currently receiving 80 per week, and they claim Pension Credit then they will receive it, up to the value of the minimum income guarantee of 109! So what is the point of raising the pension age? In my opinion it is not to subsidise this supposed increase in pension (which pensioners already get). To put it bluntly, it is to decrease the number of pensioners who will actually claim the pension, as there won't be as many around by the time they reach age 67 to claim it! And I would definitely NOT be happy to work until I'm 67! I am 41 now and I can't wait to retire! My dad retired at 65 and died 9 months later, my mother retired at 60 and died at 66! I hope to enjoy an early retirement when I am 52 and make the most of the time I have left!
Wendy Phillips, Stoke on Trent

I am only 5 years away from the current pensionable age and feel strongly against these proposals. Successive governments have had decades to prepare for the ageing population. In fact the population increases following the end of the 2nd World War depicted that 2010 would see an increase in the population attaining the pensionable age. Consequently governments have had ample time to prepare and provide people with a living pension. We have been paying our taxes for the best part of 50 years so we deserve a living pension. Looking at the proposals if we take the figures of the pension age at 67 instead of 65 together with an increase of 80 to 109 it will mean the following. Saving in pension payment over 2 years will be 80 x 104 = 8,320. Increase in pension will be 29/week which means that the pensioner will take 8320/29 = 286 wks to be back to square one, namely 5.5yrs or 82.5 years of age. In addition the government will have another 2 years in tax revenue. I don't think this is a good deal for the pensioner
Keith Bishop, St Clears Carmarthenshire




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