Work until you’re 70 to get state pension
People should have to stay in work until they are 70 before they can claim the state pension, the head of the City watchdog has said.
Lord Turner, who is currently chairman of the Financial Services Authority, first proposed increasing the state retirement age four years ago in a major review into the future of pension provision. The report said increasing state retirement age to 69 by 2050 would allow the government to offer more generous basic state pensions and would also take into account longer life expectancy.
The government took onboard his proposals; the age at which people can first claim the state pension will rise to 66 in 2024, to 67 in 2034 and 68 by 2044.
However, Lord Turner has now said his report was not radical enough, and has suggested the retirement age be raised sooner.
"If I was redoing my report I would be more radical, arguing for an even faster increase in the state pension age to make affordable an even bigger increase than we suggested in the indexation of the state pension, to really get it so it gets people out of poverty without means-testing,” Lord Turner told the BBC.
Increasing the pension age to 70 by 2030 could mean the end of means-testing, with state pension providing retirees with minimum income guarantees, he added.
His comments have provoked a mixed reaction, with the government ruling out any earlier increase to state pension age.
A spokesman for the Department of Work and Pensions, says: "Our bold changes to the State Pension system respond to the demographic changes in society. They will ensure the State Pension system is sustainable and affordable for the future.”
But pension commentators have welcomed his u-turn.
Tom McPhail, head of pensions research at Hargreaves Lansdown, says pushing up state retirement age is “urgently required to fix our pensions disaster”.
He adds: “Retirement ages need to go up faster and sooner. This is partly to facilitate the delivery of a universal pension and partly because we need to encourage those who are able to work to continue to do so.”
And pensions expert Ros Altmann says: “The first and essential element of a sustainable solution is to overhaul the state pension, simplify the system and make it a stable base on which private savings can safely be built.
"Then people can decide whether and how much longer they want to work, rather than being forced to choose between penury or working till they drop.”