Raise state pension age to 70, says report

PricewaterhouseCoopers (PwC) said the state pension age should be

raised faster and further than is currently planned.

The Government already introduced legislation to raise the age at which people can claim their state pension from 65 in 2020 to 68 by 2046.

But PwC said it was questionable whether this went far enough, particularly given the sharp rise in public debt, due to the global financial crisis, since the legislation was introduced in 2007.

It argued that the Government should instead raise the state pension age to 67 by 2030 and to 70 by 2046.

It claimed this would help to offset the rising cost of the state pension due to an ageing population, while it could also boost tax receipts as some people were likely to opt to work longer as a result of the higher state pension age.

The group said the move could save the Government around 9bn in today's money by 2046.

The report also estimates that the increase would cover around 60 per cent of the projected rise in spending on the state pension between 2010 and 2046 due to plans to increase it each year in line with earnings rather than prices.

But the group said if the state pension age was raised further, the default retirement age for employees should also be scrapped. John Hawksworth, head of macroeconomics at PwC and co-author of the report, said: "Either taxes will have to rise or other policies need to adjust to deal with the higher costs of state pensions, health and long-term care, as well as the large debt hangover from the global financial crisis.

"A phased increase in the state pension age is part of the solution and the Government already has plans to increase this to 68 by 2046, but we believe it needs to go further and faster, with state pension age rising to 67 by 2030 and 70 by 2046."

Minister of State for Pensions and the Ageing Society Angela Eagle said: "We have brought forward our review of the default retirement age and, if the evidence we are currently looking at shows it is no longer needed, we will remove it.

"Our landmark changes to the state pension system respond to the demographic changes in society and ensure the system is sustainable and affordable for the future.

"Our existing timetable for increasing the state pension age is based on the recommendations of the Pensions Commission and developed around a hard-won consensus.

"We also believe it is essential that individuals, employers and the pensions industry have adequate notice of any change to the state pension age so they can be confident in their planning for the future."