'Work until you drop' fears over pension age move

Ministers were accused of making people "work until they drop" as well as attacking the poorest members of society.

The Government put forward plans to scrap the default retirement age which allows employers to get rid of staff when they reach the age of 65.

The state pension age for men is set to rise from 65 to 66 from 2016 – nearly a decade earlier than the last government was planning – while Ministers also raised the possibility of extending the pension age to 70 and even older in the following decades to "reinvigorate retirement".

Employees will also be automatically enrolled into workplace pensions schemes from 2012.

Work and Pensions Secretary Iain Duncan Smith said: "We need to recognise that to meet the challenge of providing an affordable, stable pensions system in a society with ever increasing life expectancy, people will need to work longer."

Unions reacted with fury, accusing the Government of showing its "class bias" just weeks after gaining power, but business groups were more supportive. The general secretary of the TUC, Brendan Barber, said: "Raising the state pension age will hit the less well-off far more than the rich. Sixty-five-year-old men in Kensington and Chelsea can expect to live a further 23 years, while those in Glasgow only 14 years.

"A majority of 64-year-old men are already out of the labour market. Raising the state pension age will not help any of them stay in work. It will simply turn a generation of 65-year-olds from pensioners into the unemployed."

The joint leader of the Unite union, Tony Woodley, said: "Ordinary workers are going to have to stay at their jobs longer, and have their retirement plans put on hold, to help pay for the bailing-out of the bankers and the financial crisis made in the City."

Dave Prentis, general secretary of Unison, added: "The Government seem hard-wired into attacking the most vulnerable in society.

"Workers who have to rely on their state pension to make ends meet will have no option but to carry on going for another year, whatever the cost to their health, but the better-off will be able to retire earlier. One rule for the rich, another for the poor."

The deputy director general of the employers' organisation the CBI, John Cridland, said with people living longer than ever, we needed to find ways for people to extend their working lives.

But he added: "Removing the default retirement age and right to request working beyond 65 would cause significant practical problems for employers. Both companies and staff benefit from having a clear framework for the timing of retirement."

The director of policy at the British Chambers of Commerce, Adam Marshall, said: "It is strange that the Government has pledged to reduce the burden of employment law while at the same time proposing to restrict businesses' ability to manage their workforce by abolishing the default retirement age (DRA).

"Business agrees that the DRA is currently too low, and needs to rise for both deficit reduction and fairness reasons.

"But if Ministers want to make a positive change, they should either raise the DRA in line with the state pension age or offer employers a new dismissal route that helps business manage their workforce regardless of age."

Labour Shadow Work and Pensions Secretary Yvette Cooper said increasing the state pension age in 2016 would hit heavily people in their late 50s who would now be forced to rip up their retirement plans and stood to lose around 8,000 as a result.

National Pensioners Convention general secretary Dot Gibson said: "There can be no doubt that the wealthier you are, the longer you live, so raising the retirement age is a direct attack on the very poorest in our society. There is a myth that we are all living healthier lives for longer and very little evidence that there are sufficient jobs around for everyone to keep working. This policy isn't about choice, it's about cutting costs and making the poorest pay the highest price."

Pensions Minister Steve Webb added: "Up to 10 million people are not saving enough and we cannot allow this situation to continue."

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