Raise pension age to 67, say Blair allies

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The Independent Online

Two of Labour's closest advisers will this week call for Britons to retire later in exchange for a greatly increased basic state pension.

The influential Institute for Public Policy Research think-tank and the Pensions Commission, headed by Adair Turner - who is close to Tony Blair - will both call for radical action to solve the pensions crisis.

The IPPR will today call for the basic state pension to be increased by nearly one-third to £100 a week for a single person - a level "just above the poverty line". It will also call for scrapping means-tested pension credits and the controversial state second pension. To help pay for this, the IPPR proposes increasing the retirement age to 67 by 2030. This is in line with the United States.

Mr Turner, a former director general of the Confederation of British Industry, will also call for a higher basic pension, cutting means testing and increasing the retirement age.

However, he favours a more gradual approach, following the Swedish model where retirement ages go up in line with average life expectancy.

Until now the Government has set out its opposition to raising the retirement age. Only last month, at the Labour Party conference, the newly appointed Secretary of State for Work and Pensions, Alan Johnson, said he had rejected "crude" calls for an increase in the retirement age.

However, this is supposed to refer to calls by the National Association of Pension Funds for retirement at 70. Mr Blair has put pensions reform at the top of his agenda for a third term. He said in his conference speech that he would "design a pensions system that has the basic state pension at its core".

The TUC will also join the pension debate this week, saying the Government should "ignite" a process of reform of pensions.

Private pension funds are more than £200bn in deficit, while only half of people save for their retirement. Both the IPPR and Mr Turner will call for better incentives to promote saving for pensions, but will come out against compulsory saving for retirement.