THE state pension age could be 70 by the middle of the century, after the government announced a shake-up designed to defuse Britain’s ticking pensions time bomb.
Currently, the state pension age is set to increase from 65 to 66 in 2026. It will then continue to rise to 67 in 2036 and 68 in 2046.
But work and pensions secretary Iain Duncan Smith yesterday launched a review to see if the government could move further and faster, as it seeks to solve the problems caused by a rapidly ageing population.
He said: “If we want to be fair to the next generation of taxpayers… then we need to have a serious debate about how far and how fast we move forward.”
In their manifesto, the Tories said they would not increase the state pension age for men to 66 before 2016.
The government also said it would review plans to automatically enrol employees into a company pension, earning plaudits from employers that dislike the proposals.
“We take seriously the impact of automatic-enrolment on employers, and want to minimise administrative burdens on them,” said Duncan Smith, adding that he still backed the idea in principle.
However, companies were less pleased with a review into how quickly the default retirement age – which allows firms to ask staff to leave at 65 – can be phased out.
“Removing the default retirement age… would cause significant practical problems for employers,” said John Cridland, the director-general of employers’ organisation the CBI.
Duncan Smith said the pensions system was in need of “radical reform”. He pointed out that in 1940, when the retirement age was set at 60 for women and 65 for men, life expectancy was 72. Today it has soared to 89 for men and 90 for women.