Blair attacked over plan to curb early retirement

Tony Blair was accused of "nanny state politics" last night as it emerged that the Government was planning to curb early retirement for under-55s.

The CBI, teaching unions and opposition parties attacked Cabinet Office proposals to raise from 50 to 55 the minimum age for tax breaks on occupational or private pensions.

The move is part of a package of reforms due to be announced tomorrow by Alistair Darling, the Secretary of State for Social Security, to encourage more over-50s to stay in the job market. The Government estimates that early retirement is costing the Exchequer some £16bn a year as more and more people benefit from generous pension arrangements.

Downing Street refused to deny reports that the Government wanted to make it more difficult for people to retire early, triggering an angry response from the Liberal Democrats and the CBI.

At the same time, teachers yesterday demanded the right to retire at 50 on a full pension and warned that thousands of staff would be consigned to live on less than the minimum wage if no action was taken.

The recommendation to end current tax breaks for people who choose to retire at 50 is one of more than 100 proposals contained in a report by the Cabinet Office's Performance and Innovation Unit.

The 117-page report, entitled Winning the Generation Game, aims to shift attitudes of employers and the workforce to make it easier for people to work later in life.

It will require Whitehall departments to raise the retirement age from 60 to 65 and it expects doctors, teachers and the armed forces to follow suit.

The thrust of the report is intended to end discrimination against older workers and make it easier for the over 50s to engage in voluntary work without losing state benefits. However, it is the curb on early retirement that has caused most controversy, with plans to raise the age at which individuals can enjoy tax breaks from 50 to 55 from 2010.

Steve Webb, the Liberal Democrats' Social Security spokesman, said: "This is yet another example of nanny state politics from Tony Blair's Government. People should be given the choice about whether to carry on working."

John Cridland, the CBI director of human resources policy, said businesses would be concerned about what could prove to be unworkable legislation. "Changes to company pension tax relief would be a major concern to business. Companies invest £26bn in pensions each year and we would expect the Government to consult us before making any decisions," he said.

Members of the 180,000-strong National Association of Schoolmasters Union of Women Teachers overwhelmingly called for an end to reduced pensions for staff who retire before the age of 60. Delegates to the union's annual conference in Llandudno, north Wales, said jaded teachers should be allowed to leave the profession early "with dignity".

A motion passed by the conference condemned the practice of offering reduced pensions to those who left schools before completing 40 years' service, claiming many members would have to cope on less than £200 a week. Delegates attacked the Government for allowing headteachers to retire at 55 on a full pension, while teachers who retired at the same age had to settle for payments worth just three-quarters of the full pension.

Nigel de Gruchy, the general secretary of the union, said the issue had attracted more interest from members than any other being debated.