Pension age raise plans to be outlined

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The government is to speed up plans to raise the state pension age for men to 66, possibly by as early as 2016.

Ministers will also raise the option of extending it further, perhaps to 70 and beyond in the following decades.

The default retirement age of 65 - at which workers can be legally axed by employers - is also set to be axed.

Deputy Prime Minister Nick Clegg said this would stop people being "cast on the scrap heap" and would help "reinvigorate what retirement means".

But unions have condemned the plans as creating a "work-until-you-drop" system.

More details will be outlined later by the coalition team running pensions policy - Conservative Work and Pensions Secretary Iain Duncan Smith and Liberal Democrat pensions minister Steve Webb.

They are expected to say they want to legislate soon for the state pension age for men to be raised to 66, but that it will not happen before 2016.


'Reinvigorate retirement'

Women will be moved to that level a few years later.

The previous Labour government's policy was to raise the pension age to 66 in 2024 and then gradually to 68 by 2046.

They coalition will argue that this should be speeded up, eventually meaning a pension age of 70 or older.

The government also wants to scrap the default retirement age - which allows employers to shed staff at the age of 65.

Mr Clegg told the BBC: "I think the idea of having an increase by one year in the retirement age is accepted. It's just a question of how far you bring it forward.

"At some point you have to do it, so at some point we need to take this leap.

"I think it needs to be looked in the round.

"It will also be accompanied by removal of the default retirement age.

"We're going to make sure there's more flexibility for people at that age if they wish to keep working full time or part time."

But Bob Crow, general secretary of the Rail Maritime and Transport union, said: "As well as hitting pay, living standards, public services and jobs, the latest assault from the government is work until you drop.

"If you are a rich banker with a private pension you can sail off on your yacht at 55, but for working men and women retirement will be pushed further and further over the horizon in a step back to the days of Dickens. That is not sharing the pain, it is hitting the poorest hardest yet again."

UK life expectancy is currently 77 years for men and 81 for women.

Paul Kenny, general secretary of the GMB union, said: "The government knows that manual workers in the industrial regions of the UK do not enjoy anything like the same life expectancy as professionals or other classes or employees.

"To force someone who has done a lifetime of toil on building sites, farms or in factories to work until they are 66 is completely unacceptable."

In Tuesday's Budget the government announced that, from April 2011, the state pension would go up by the increase in average earnings, or in line with prices, or by 2.5% - whichever is highest.

Previously the state pension would go up every April by 2.5%, or the level of the Retail Prices Index the previous September.

This had been considered as unfair by some, as prices had lagged behind average earnings.


Public sector pensions

On Wednesday Prime Minister David Cameron warned public sector workers they can expect less generous pensions in future.

He said reform was necessary as part of efforts to save billions in order reduce the record deficit

Mr Cameron argued that that the bill for public sector pensions was becoming unaffordable and insisted he wanted to start by limiting the pensions of those on highest salaries whose pensions, he said, could be worth £60,000 to £70,000.

Pensions expert David Cule, from the independent financial advisers Punter Southall, told the BBC: "One way of looking at it is that he is sort of bringing [public sector pensions] into line with the private sector."

People already in retirement will not be affected, but those up to 30 years away from retirement will find that they will receive less than they expected - "which is of course what has happened in the private sector over the past five to 10 years," he said.