Retirement
age 'should be raised'
BBC
News, September 19, 2002
Raising the state pension age
is the only solution to the pensions crisis, a pensions research
group has warned.
In its first report, the
Pensions Policy Institute said the debate on raising the retirement
age could not be put off any longer.
If the state pension age was
raised to 70, at no extra cost, state pension payouts could be about
£110 ($171) a week or about £130 for over 75s.
Raising the state pension age
would not only provide pensioners with a greater retirement income,
but also take older pensioners out of means testing, said PPI.
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With a higher state pension age, a better state pension can be
afforded at no extra cost
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Alison O'Connell
PPI director
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Counting the cost
There is growing concern about
how pensions will be funded in the future.
Increased life expectancy, an
ageing population and the closure of secure final salary pension
schemes are fuelling the debate over pensions provision.
PPI said that increasing the
state retirement age did not need to be introduced for another 20 or
30 years, and therefore would affect only people under the age of
40.
But the research body said it
was necessary to reflect increasing longevity.
Demographic changes were having
a huge impact on the UK pensions pot, PPI, said.
By 2045, just under 20% of
women and 12% of men over 65 years old will reach 95, the report
said.
And there are increasing
demands on the system.
Only 66% of people lived to
collect their pension when the state system was set up, compared
with 90% of people now.
People retiring today are
collecting their pension for eight years longer.
Raising the state pension age
could take pensioners off means-tested benefits, for a small
temporary extra cost.
State pension resources would
then be focused on giving a meaningful basic state pension to
"older pensioners, instead of a small amount to all".
Saving or working
PPI said there were only two
ways out of the pensions crisis: saving more or working (and saving)
longer
Working longer would be
"the more attractive solution for many people", it said,
and would fit with the fact that we are living longer.
PPI was set up to provide
independent research on pension provision.
It aims to collect better
information on retirement provision, as well as to prepare long-term
pensions planning and improve public understanding of the pensions
issues.
David Willetts MP, shadow
secretary of Work and Pensions, welcomed the report.
"I particularly like the
idea of a higher basic state pension for older pensioners to take
them off means-tested benefits.
"That's why we put this
forward as an alternative to the government's pension credit, which
will bring more than half of all pensioners into means testing.
Better money
Other countries are raising
their state pension age. For example the US is increasing it to 67,
and Australia, Germany and Italy are among many other countries with
plans for an increase.
In the UK, the state pension
age is 65 for men and 60 for women, but is due to be equalised to 65
for all by 2020.
Alison O'Connell, author of the
paper and director of PPI, said: "People are living
significantly longer. Health and job prospects for the over 65s are
improving.
"Working longer can help
to fund better retirement income. And the real prize is that, with a
higher state pension age, a better state pension can be afforded at
no extra cost.
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