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Saturday, 30 September, 2000, 09:14 GMT 10:14 UK
Retirement 'madness' attacked
Sir Howard Davies
Sir Howard Davies: Greater incentives for older workers
A leading figure in the City has described the trend for people to take early retirement as "a kind of madness that has to stop".

Speaking on Radio 4's Money Box programme, Sir Howard Davies, the chairman of the Financial Services Authority, says the government should provide greater incentives for older people to continue working, so that more funds are available for pensions.

"Many people don't start working until their early 20s and a lot of them retire in their early 50s, so 30 years of work is then paying for 20 to 30 years of retirement," he said.

"The arithmetic just does not add up."

His warning comes at the end of a week when the government faced strong demands to boost the income of all those over pension age.

Sir Howard believes the way to fund better pensions is to encourage people to work into their 60s.

Funds warning

He also called on the government to scrap complicated tax laws that discourage people from claiming part of their pension and working part time.

He says unless the government encourages more older people to carry on working it will be harder to give the rest a decent income.

On Thursday, Prime Minister Tony Blair said the government would not change its policies on pensions, despite suffering an embarrassing defeat on the issue at the Labour Party conference.

Delegates voted by a majority of nearly three-to-two in favour of a motion calling for the basic state pension to be linked to average earnings.

But Mr Blair said the government would not be swayed by the result, adding that restoring the link between pensions and earnings would amount to long term irresponsibility.

In April, the government announced it would change the tax rules to prevent people taking early retirement before the age of 55.

Ministers said they wanted to reverse a growing trend of firms using younger workers and shedding older, more experienced staff.

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See also:

28 Sep 00 | Labour
Blair stands firm on pensions
28 Sep 00 | UK Politics
The pensions maze
31 Jul 00 | UK Politics
Call for action against ageism
27 Apr 00 | UK Politics
Early retirement age to be raised
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