CBI says raise retirement to 70

THE retirement age for a state pension should be raised from 65 to 70, business chiefs said yesterday.

This would help plug a multibillion-pound shortfall in the amount workers need to retire on, the Confederation of British Industry argued.

Workers would in exchange receive a more generous state pension worth £105, instead of £79.60.

The call came as a report warned that women were most at risk from the pension crisis, with millions facing poverty in retirement.

The CBI believes raising the age at which workers can claim the basic state pension between 2020 and 2030 would help fund a decent living standard for pensioners. But the controversial proposal will be seen as encouraging people to work until they drop.

And raising the value of the state pension would increase Government spending by almost £10bn a year. But the CBI believes the scale of the crisis will force ministers to consider the move.

John Cridland, deputy director general, said: 'To have a decent income in retirement the state pension age will have to rise.'

Richard Greenhalgh, chairman of Unilever and the CBI's pensions strategy group, said: 'At some stage the Government of the day will need to look at this issue.'

The CBI is the latest in several influential organisations to call for the state pension age to be raised, including the National Association of Pension Funds.

The move would fit into the Government's wider aim of encouraging people to save more and work longer. Evidence is mounting that millions will be unable to rely on their pensions for income as traditional schemes are closed and the state pulls back from funding retirement.

Longer life expectancy and falling share prices are blamed for the crisis, while red tape and higher taxes have also added to the problem.

Yesterday an Age Concern report revealed that women were most likely to face poverty in old age because many do not work or take time off to have children or look after relatives.

Surprisingly, those on modest incomes with a small amount of savings could be worse off than those on low salaries with no private pension.

That is because they would not qualify for benefits and may not have saved enough.

Age Concern said one in five workers earning between £15,600 and £31,200 have no current private provision. The figure rises to one in three among those who earn between £10,400 and £15,600.

The CBI has drawn up 22 recommendations but rules out forcing firms to save on behalf of employees. Instead, it says companies should be allowed to automatically put workers into their pensions unless they actively opt out of joining the scheme.

Among other recommendations, the CBI calls for a £2bn package of incentives to help small and medium-sized firms get more staff saving.

TUC general secretary Brendan Barber said: 'Many of its policy prescriptions are wide of the mark.

'Employees in particular will be angry that their employers are suggesting they should work until they are 70 before they get a state pension.'

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