Pension age needs to rise to 72, urges think tank

The age at which people can claim the state pension needs to rise to 72 within 20 years if it is to keep pace with increases in life expectancy, a think tank said today.

The Pensions Policy Institute (PPI) said in 1981 people typically received the state pension for 25% of their life.

But by 2000 increased longevity meant that the proportion of people's lives during which they were in receipt of the benefit had jumped to 30%, while it had increased further to 33% by this year.

The group said if the Government wanted to maintain the amount of time people could claim the state pension constant at the 1981 level, it would need to increase the age at which they first received it to 72 by 2030.

It added that even if people were to receive it for around 30% of their life, the state pension age would still need to rise to 68 within 20 years.

But the group, which was responding to a Department for Work and Pensions consultation on the issue, said people would need time to adjust to any increases, to enable them to work for longer or save more.

It said men would need at least five years' notice, and should ideally be given 10 years' warning about a change, while women would need more than 10 years.

Other factors that would need to be taken into account when deciding on the timing of any future increases in the age at which people could claim the state pension include levels of economic activity among older people and employers' attitudes towards older workers.

The Government should also take into account differences in life expectancy among people from various socio-economic groups, and for how long people were expected to remain healthy and active.

The PPI said the Government may want to consider paying a higher state pension to people with a short life expectancy so that they were not disproportionately affected by any changes.

Women can currently claim the state pension from the age of 60, while men can begin claiming it once they turn 65.

The age at which women can claim the benefit is being gradually increased to 65 between now and 2020, while the previous government legislated to increase the state pension age for both sexes to 66 by 2026 and to 68 by 2046.

But the current Government has indicated that the age at which people can claim the benefit may need to rise faster and further than this.