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Hutton argues for longer working Hutton says pension age must rise
(about 1 hour later)
The retirement age has to be raised to avoid shifting the tax burden onto younger people, Work and Pensions Secretary John Hutton will warn. The state pension age has to be raised to 68 to avoid shifting the tax burden onto younger people, Work and Pensions Secretary John Hutton is warning.
People will have to work until 68 to avoid a 4p income tax rise, Mr Hutton will say in a speech. If the change, to phased in over 40 years, does not happen, there will have to be a 4p rise in income tax, he says.
The changes, to be introduced over the next 40 years, will be included in a bill of reforms published next week. The proposed rise from 65 in the age at which people could get the state pension is expected to be included in a bill of reforms published next week.
Mr Hutton will say failing to act would place an "unsustainable burden on our children and grandchildren". The bill will also reinstate a link between pensions and earnings.
Earnings-relatedEarnings-related
The pensions package, unveiled in last week's Queen's Speech, will also include a pledge to re-link the basic state pension to earnings within the next parliament. The pensions package, unveiled in last week's Queen's Speech, will also cut the number of years it takes to build a full basic state pension from 44 years for men and 39 years for women to 30 years for everyone.
It will cut the number of years it takes to build a full basic state pension from 44 years for men and 39 years for women to 30 years for everyone. According to the government, by 2010, 70% of women reaching state pension age would have a full basic pension compared with only 30% today, increasing to more than 90% by 2025.
According to the government, by 2010, 70% of women reaching state pension age would have a full basic pension compared to only 30% today, increasing to more than 90% by 2025. Ahead of a speech on the subject Mr Hutton told the BBC: "If we want a more generous state pension - which we are doing now with a link to earnings - then there are some very simple economics about this.
Addressing the Association of British Insurers, Mr Hutton will say: "It is a big step to ask one parliament to set a course for 40 years. But it is the right thing to do." "We either have to pay more tax or we work longer."
"As unpopular as it may be to talk about working longer - the simple fact is that if we aren't prepared to increase the state pension age, we will simply pass an ever greater and frankly unsustainable burden on to our children and grandchildren." He said there would be plenty of jobs for older workers: "The labour market is changing, our pension system will have to change to reflect that."
He will warn critics of the move: "Those who would oppose the increase must do so in the full knowledge of the predicted consequences. He described it as "being fair to everyone - taxpayers and pensioners".
Later, addressing the Association of British Insurers, Mr Hutton will say: "It is a big step to ask one parliament to set a course for 40 years. But it is the right thing to do."
Consequences
"As unpopular as it may be to talk about working longer - the simple fact is that if we aren't prepared to increase the state pension age, we will simply pass an ever greater and frankly unsustainable burden on to our children and grandchildren," he will add.
And he will warn critics of the move: "Those who would oppose the increase must do so in the full knowledge of the predicted consequences.
"They are in effect arguing for more than a 4p rise in the basic rate of income tax to pay for a population spending more and more of their lives in retirement.""They are in effect arguing for more than a 4p rise in the basic rate of income tax to pay for a population spending more and more of their lives in retirement."
The increase in the retirement age is to be kept under regular review to ensure life expectancy, especially in deprived areas, is keeping up.The increase in the retirement age is to be kept under regular review to ensure life expectancy, especially in deprived areas, is keeping up.