Thu, 2 Sep 2010

Pension age could be 66 within five years

Pensions experts are predicting a swifter rise in the state retirement age following shock figures from the Office for National Statistics that showed the ratio of working adults for every pensioner will fall from four to three within a decade. It could plummet to just two workers per retired individual by 2040.

Iain Duncan Smith, the Work and Pensions Secretary, said: ‘The current plan to raise it [the pension age] to 68 we think could be accelerated. It seems silly to wait.’

For boys born in 2010, the average life expectancy is 89, while for girls it is 90. This compares with life expectancy of around 70 in the 1940s, when the state pension age was set.

The previous Labour Government approved plans to increase the state pension age for women to 65 by 2020 and to 66 for both sexes by 2026. It was due to rise in stages, reaching 68 for men and women in 2046 under the terms of the Turner Review.

But the most recent projections indicate these measures will be insufficient. Pensions Minister Steve Webb said: ‘We cannot ignore our ageing society.’

In June, ministers began public consultation to determine the new date. The findings are expected soon.

An ageing society and generous pension promises represent a challenge for all European countries, where birth rates are low and budget deficits are growing.