by Sharon Norris
A report on pensions (PDF, 2.67MB) due out later this month will recommend a more generous state pension in return for a longer working life.
The Pensions Commission, headed by the former CBI director general, Lord Turner, is expected to recommend that the state pension age should be raised to 67 by 2020, and thereafter adjusted in line with increased life expectancy. However, it is also likely to recommend that the state pension be linked to earnings rather than prices, and increased to a level that would bring it closer to the minimum weekly earnings. At current rates, this would raise it from around £80 to nearer £110 per week.
It is expected that the report will also suggest that everyone should be forced to enrol in a new state-run pensions savings plan, though they would be able to opt out at a later date - so-called 'soft compulsion'.
The Pensions Commission was set up by the Government to investigate how best to deal with the fact that people are living longer but saving less for their old age. According to the Commission, just over 30 per cent of men's adult life is spent in retirement. However, with life expectancy continuing to rise and people now paying less into private pensions plans, there are concerns that many people over 65 will not have enough to live on.
just over 30 per cent of men's adult life is spent in retirement
In its interim report issued last year, the Pensions Commission said that there were three possible options if pensioners of the future were not to be significantly poorer than they are now. These were: to raise taxes, increase savings (with the possibility of people being forced to save more), or raise the retirement age. The Commission now looks set to recommend a combination of all three when its report is published at the end of the month.
Were the Government to adopt these proposals however, it could prove controversial, especially as it agreed just last month not to increase existing public sector workers' retirement age from 60 to 65. Nevertheless, despite this commitment, Tony Blair now looks willing to agree to an increase in the retirement age for the rest of the population. If so, this is likely to provoke strong criticism.
While few people would argue that measures need to be taken to avert a full-scale pensions crisis, across the political spectrum opinion is divided, particularly on whether people should be forced to save more. The Conservatives are against this, as are the Liberal Democrats. Last week the Conservative spokesman on pensions, Nigel Waterston, accused the Government of a "failure of political will" on the pensions issue, and argued that people needed to be given more information and better incentives to encourage them to save more.
The pensions crisis is one of the topics likely to be discussed at the ESRC Annual Debates, which this year focus on Ageing Britain and the implications for our society of having a growing percentage of the population over 65. The debates will be held in London (22nd November), Cardiff (29th November) and in Glasgow (6th December). If you would like to attend, please contact the ESRC on: 0208 542 7622, or email esrc@vistaevents.co.uk
What do you think about the pensions crisis?
- Is the Government wrong to allow some of us to retire at 60 but not others?
- Should we be forced to save more for our retirement?
- Would you be prepared to pay more tax to fund your pension?
- Should men and women retire at the same age?
Have your say on the ESRC's Ageing Britain discussion forum.
We want to hear from you!