The TUC said that Institute of Directors’ (IoD) proposals to raise the state pension age to 70 would leave older people in a “workless limbo”.
The IoD report, Roadmap for Retirement Reform, said: “The state retirement age, in the light of the great increases in life expectancy, and healthy life expectancy, needs to move swiftly to 70. We believe there are great benefits in doing so for individuals, businesses and the state. We think 70 should become the new ‘default’ retirement age.
“It is clear that the status quo cannot continue. The current retirement system is not adequate to deal with the enormous increases in longevity and long-term care needs. A higher retirement age, a better basic state pension and a genuine incentive for people to save and to engage with retirement savings products are essential if we are to address the enormous challenge to come.”
But TUC general secretary Brendan Barber said such a move would hit the poor: “The better off you are, the more years you get to claim a state pension. A big rise in the state pension age would mean the less well-off lose a much bigger proportion of their pension than longer-living, affluent pensioners, who are much less dependent on the state pension in any case.
“With employers fighting hard to keep a retirement age of 65, such a proposal would condemn many older people to a limbo where they are too old to work and too young for a state pension. Taking from the poor to give to the rich is no way to reform the pensions system.”
The IoD also called for the abolition of most means-tested state retirement benefits and recommended that the money saved should go towards a universal state pension “probably” above the current level.
IoD chief economist Graeme Leach said: “Radical simplification is needed. Startling increases in longevity in recent decades also means that it is unrealistic to expect to be able to fund a potential 25 to 30-year retirement from an effective 30 to 35-year working life.”
Report author Malcolm Small, an IoD senior pensions adviser, said: “Let’s go for a straightforward system where we have a higher state pension but we will clear out all these pension benefits that are means-tested.”
Barber said the IoD report “fails to address the platinum-plated pensions enjoyed by FTSE 100 directors, which pay out nearly £250,000 a year and are commonly available at 60″.
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The Conservative Party wants to raise the state pension age to 66 by 2016, while the government plans to do so by 2026.
The single person’s pension – for those with a full national insurance contributions record – is now £95.25 a week.
