Pension age must rise more quickly, government says

Monday, 12 September 2011 10:34

The timetable for raising the state pension age to 67 is too slow and should be accelerated, the government has said.

At the moment, the age is due to rise to 67 in 2036 and to 68 by 2046, but work and pensions secretary Iain Duncan Smith told the BBC that this rate of change is not fast enough.

He suggested that an automatic mechanism is being considered, but stressed that no decision has been taken yet.

"We've always said that the timescale left by the last government was too slow," Mr Duncan Smith said. "The [last] government left us with a deadline in the 2030s and we think that's too late because people's age levels have increased even since they made that announcement.

"People are living longer but they're still retiring at the same age, so the purpose now is to look at that and we're reviewing that to see what might be reasonable, but always giving them good warning about what happens."

Meanwhile, chief secretary to the Treasury Danny Alexander told Sky: "The issues around the later retirement age have to be dealt with.

"We have talked about an automatic mechanism so that as life expectancy increases, so does the state pension are. These discussions are going on," he added.

Ray Chinn, head of pensions at insurer LV =, said the announcement will come as unwelcome news to those approaching retirement who will be most affected by the changes.

However, he went on to suggest that the reforms are inevitable in the current economic climate.

Mr Chinn added: "It serves as a timely reminder that where possible, people should make as much provision for retirement as they can, through their own pension savings or other investments.

"Those who will be impacted by the changes and do have their own pensions savings should consider taking financial advice to ensure they can maximise their retirement income and make up any shortfall in state pension, which could include options such as enhanced annuities, income drawdown or equity release."

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