Lord Adair Turner, former chairman of the FSA and Pensions Commission, has proposed raising the state pension age to 70 by 2030.
The proposal, which represents a radical acceleration of the government’s current timetable, would affect workers aged 56 and less today.
However, Lord Turner said those working in physically demanding industries or on low incomes could be granted earlier access at a lower rate.
Speaking at a private event on Friday (20 May), Lord Turner was quoted as saying: “I would make the state pension more generous at 70 and, in addition, I would introduce forms of state pension or means-tested benefit, which would be available for lower-income people who’ve retired from 65 or 66 onwards.”
The current timetable for raising the age pension eligibility age stops at 68, which it would reach in 2048.
However, with a government review chaired by John Cridland into the state pension age currently underway, this timetable is likely to change.
The review is in the consultation phase.
Tom McPhail, head of retirement policy at Hargreaves Lansdown, said changing the state pension age would be politically difficult and likely to upset voters.
“The state pension is a blunt instrument, which makes no allowance for people’s wealth or their life expectancy,” he said. “However any deviation from the current state pension entitlement calculation based on a simple NI contribution history to one based on individual circumstances, could be both complicated and contentious.
“Radical options, including medical underwriting, means testing, or using the state pension as a long stop for when someone has exhausted their private savings are all possible.
“The government will no doubt be mindful that it is very difficult to introduce any reform in this area of public policy without upsetting some voters.”
Matthew Harris, director of Dalbeath Financial Planning, said it was inevitable that the eligibility age would and should increase to 70 eventually.
However, he said Lord Turner’s proposal to introduce an interim state pension for people in physically demanding jobs was less attractive, because it would re-introduce means testing.
“I’m a fan of the flat rate pension, and Lord Turner’s proposal would mean a return to the means testing that we had before that, and all the complications that come with it,” he said.
He added that he wasn’t “entirely convinced” that there are industries in which people must retire earlier.
He said a more sensible approach in such industries would be to move older employees into less physically demanding roles. The onus would be on employers to work out how to do this, he said.
james.fernyhough@ft.com
