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Last Updated: Friday, 25 November 2005, 11:09 GMT
Q&A: Raising the state pension age
Old person
The state pension age may rise
A political storm is brewing over proposals to raise the state pension age to 67 and link future rises in the pension to earnings rather than wages.

Lord Turner's pensions commission is expected to call for such steps in a report to be published on 30 November.

But Chancellor Gordon Brown is reported to have described linking the state pension to wages as"Unaffordable".

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 84.25 a week, while a married couple receives 134.75 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 state 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.

That trend towards increased longevity is officially expected to continue.

Are the trade unions very upset at all this?

They have been.

Some of them, especially those with members in the public services, have fought off a suggestion that existing members of several big public sector pension schemes should see their retirement age rise from 60 to 65.

This will now come in only for new joiners to the civil service, NHS and teachers pension schemes.

The unions would prefer to keep the existing retirement age but ensure that both employers and employees contribute more to compulsory schemes.




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