Hutton warns retirement age must rise
The retirement age must be raised to 68 to pay for pensions, or future generations will pay the price with a 4p rise in income tax, John Hutton has warned today.
The work and pensions secretary stressed that a gradual increase in the state pension age from 65 to 68 can be agreed now to save future taxpayers taking on huge costs.
“As unpopular as it may be to talk about working longer – the simple fact is that if we aren’t prepared to increase the state pension age, we will simply pass an ever greater and frankly unsustainable burden onto our children and grandchildren,” he said.
The pensions bill is due to be published next week and will set out plans for upping the retirement age to 68 by 2046 and restoring the earnings link with the state pension.
In a speech to the Association of British Insurers (ABI) in London today, Mr Hutton said the pension age is “possibly the most significant part of next week’s bill”.
“It is a big step to ask one parliament to set a course for 40 years. But it is the right thing to do,” he said.
“We need to lock in stability in pensions policy to allow future generations to plan ahead with confidence. We need to be straight with people on this crucial issue so they know where they stand and can plan accordingly.”
Trade unions are against the increase in the retirement age, arguing that people should not be forced to “work until they drop” – new figures released this week show the life expectancy for men in Glasgow is just 69.9, compared to a UK average of 76.6.
However, today Mr Hutton argued that you cannot deal with differences in life expectancy through the pension system – these must be tackled with better strategies on public health, child poverty and improved education and skills training.
Life expectancy was increasing in all parts of the country, he said, adding: “In Scotland, for example, where life expectancy has been lower, longevity is now expected to improve faster than in other parts of the UK.”
Mr Hutton concluded: “Those who would oppose the increase in the state pension age must do so in the full knowledge of the predicted consequences.
“That they are in effect arguing for more than a 4p rise in the basic rate of income tax to pay for a population spending more and more of their lives in retirement.”
