Pension age hike after a detailed debate, says Chancellor |
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Tue, 20 Sep 2005 11:35
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LONDON: Britain's chancellor of the exchequer Gordon Brown said he favours a national debate before taking a decision on the proposal to increase the retirement age to 67. His comments come in the wake of remarks made by work and pensions secretary David Blunkett that delaying the state pension age was one of the ways of tackling a possible pension crisis.
Blunkett mooted the idea after his visit to the U.S. where the retirement age is set to go to 67 years over the next 20 years. He had the looming pension crisis in mind. The government is struggling to find a solution to a deficit of 130 billion pounds in the pension scheme mainly caused by rising life expectancy.
Meanwhile, the government-appointed Pensions Commission under Lord Adair Turner is expected to present its final report in November, where it is likely to suggest major changes in the retirement age. In its interim report in October 2004, the commission had suggested a combination of higher taxes, greater savings and a higher average retirement age to prevent more and more people going below poverty line. It said nearly 12 million people in the U.K. do not have sufficient savings to see them through retirement. It also recommends that the present pension age of 60 for women should be increased to 65 by the year 2020. This will bring it in line with men.
Lord Turner said these steps are necessary as people are living longer. The concept of a single state pension age tends to become meaningless as people take up incentives to defer the date on which they start to receive a pension. The system allows people to take the basic state pension at a range of different values and at different ages.
Brown, canvassing for a candidate in a by-election in Scotland, said there will be no decision on raising the pension page without a national debate. Analysts feel this view is indicates the government's thinking that it does not wish to take any crucial decision in the matter until after the next general elections.
Several trade unions too reacted strongly to the suggestion, saying they would take strike action if their members in occupational pension schemes were forced to work longer. However, employers' organisations wanted the retirement age to be raised to 70.
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