Pension age 'index-linked to life expectancy'

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Indy Politics

The age at which people can claim their state pension may be changed to rise in line with increases to life expectancy.

Work and Pensions Secretary Iain Duncan Smith said the state pension age could in future be indexed to increase in line with changes to longevity projections, as is the case in Denmark.

In an interview with the Spectator magazine, he said it was "an absolute imperative to start moving the retirement age up".

The Government announced in the Queen's Speech earlier this week that it planned to review the current timetable for increasing the state pension age.

Under current legislation, the age at which people can claim their state pension is due to increase to 66 between 2024 and 2026, followed by two further increases at 10-year intervals to raise it to 68 by 2046.

But it is understood that the new Government thinks this may not be quick enough, particularly in the current economic climate.

The Department for Work and Pensions has pointed out that since the timetable was first published, the Office for National Statistics has issued revised life expectancy projections.

These show that a man who turns 65 in 2020 is expected to live for a further 22.4 years on average, up from previous assumptions that he would live for another 20.9 years, upon which the increase to the state pension age was based.

Life expectancy projections for women follow a similar pattern.

It is thought that one of the things the Government review will consider is whether in future the state pension age should rise automatically in line with longevity projections.

Mr Duncan Smith said: "Ultimately, governments should head to that sort of process which is rather like the link between benefits and RPI inflation."

However, the Government has said it will not increase the age at which people can start to draw their state pension to 66 sooner than 2016 for men and 2020 for women.

It has also pledged to review the default retirement age of 65, with a view to scrapping it, to enable people to work for longer.