RETIREMENT

A report by the Adam Smith Institute, suggests that raising the retirement age to 68 would be enough to double the size of the state pension which is currently £77.45 a week. The present pension system costs the Government about £70bn per year and to double the state pension payout would cost an extra £40bn. However, about £10bn could be saved for each year people had to wait before they became eligible for a state pension.

This would be combined with incentives for employers to retrain older workers to enable them to continue earning, and to set up their own pension schemes and contribute to them. A Department for Work and Pensions spokesman said that, at the moment, the Government was committed to retaining the state pension age at 65 while making it more flexible for people to work longer if they wished. According to Derby City Council's 2001 Poverty Profile, the average life expectancy for males in Derby is 73 and for women is 77.

The government plans to raise the retirement age to 70. Industry secretary Patricia Hewitt hinted at a potential Cabinet row over the proposals to adapt British law to meet EU equality directives and help stave off a looming pensions crisis. In a letter to chancellor Gordon Brown and pensions secretary Andrew Smith, Hewitt accepts that there are "different perspectives" between government departments as to how to tackle the problems.

Acknowledging that "there has not been consensus" within Whitehall, the document shows that she wants a special Cabinet sub-committee to be urgently convened to come to a conclusion. Ministers are officially consulting on the proposal following a pensions green paper published in 2003. But Hewitt urges her colleague to make a quick decision ahead of an EU deadline of October 1, 2006, by which time Britain must bring it legislation into line with age discrimination laws.

"I know we share a common determination to end unjustified aged discrimination at work," she says. "Equally, I want to be sure our final decision strikes an appropriate balance between the new rights for individuals and the new responsibilities for employers."

Some campaigners fear the move could force people to work until 70 in order to receive a pension. However ministers want to make the move optional. Speaking to the BBC Politics Show on Sunday, Smith said the consultation is continuing and that the government would respond soon.

"We will take a common sense approach," he promised. "We have had a lot of representations saying we should raise the statutory pensions age to 70," the pensions secretary said. "We said no... that would be unfair. The question is how we encourage people to save more."

People could be forced to save more for their retirement, new Work and Pensions Secretary David Blunkett signalled. Compulsory saving for private pensions is one way of addressing the shortfall highlighted by Adair Turner's interim report. Mr Blunkett made it clear all options were under consideration but said he wanted cross-party consensus. "There are no off-limits here. We have got to be able to address quickly and decisively where we are going," he said. "I want to build a consensus so I want, with Adair Turner, to be able to reach out to the other major political parties because we need a lasting solution for the decades ahead not a quick fix." The initial Turner report found 12.1 million people aged 25 or over are failing to save enough to enjoy a comfortable retirement.

Mr Blunkett said, "Fifty years ago we had a situation where people on the whole lived 10 years after retirement, and retirement was, on average, at the age of 67. Now we have a situation where people live on average 20 years longer. They want to retire earlier. The average age of retirement is below 65. But the number of people of working age sustaining those in retirement has dramatically fallen. A hundred years ago when we started today's pensions scheme there were actually 10 people in work for every one in retirement. In the middle of this century there will be two people in work for every one in retirement. When you grasp those facts you see that this is not a solution for government it is a solution for all of us." (Source: Mail on Sunday)

Over-65s are to get the same protection against unfair dismissal as younger workers and forced retirement before the age of 65 and age discrimination in recruitment, promotion and training will be banned. The measures will come into force in October 2006 and bring UK laws into line with those in the USA and in most other EU countries. Under the plans, employers will also have to consider requests from their employees to work after the age of 65. If an employer wants a worker to retire at 65, they will have to give them six months notice and will still be able to force them into retirement at age 65.

New state pension retirement ages for everyone under the age of 47 have been revealed. Anyone born before the 6th April 1959 is unaffected by the plans and will retire at 65. But those born after that date will see their retirement slip past their 65th birthday and everyone aged 27 or less faces working three years longer, until they are 68, before they receive their state pension. The new retirement ages will be phased in over a 22 year period, starting in 2024.

If you are aged between 38 and 45, you will receive your state pension at 66. Those aged 37 today will retire on a state pension between 66 and 67, while everyone between 29 and 36 must work until they are 67. If you are aged 28, you will retire between 67 and 68. Anyone 27 and under must wait until 68. Women, who currently retire at 60, will be brought into line with men at 65. This will be phased in between 2010 and 2020.