Iain Duncan Smith confirms that the state pension age will rise to 66, ten years early

Iain Duncan Smith is moving fast.  The Daily Telegraph reports this morning that the Government will encourage people to work for longer by making it illegal for companies to force staff to give up work at 65. It will also bring forward by a decade the year at which the state pension's claimable to 66 rather than 65.  The Work and Pensions Secretary's aim is to "herald a new age of shorter but wealthier retirements".

He told the Telegraph:

“People are living longer and healthier lives than ever, and the last thing we want is to lose their skills and experience from the workplace due to an arbitrary age limit.  Now is absolutely the right time to live up to our responsibility to reform our outdated pension system and to take action where the previous government failed to do so.

If Britain is to have a stable, affordable pension system, people need to work longer, but we will reward their hard work with a decent state pension that will enable them to enjoy quality of life in their retirement. That is why we are issuing a call for evidence on moving the state pension age to 66, and thereafter plan to take a frank look at the relationship between state pension age and life expectancy.”

The cornerstone of Duncan Smith's plan is a trade-off between encouraging people to work longer and higher pensions for them when they retire.  The budget announced that the state pension's once again to be linked with earnings, and the Government plans to enroll workers in company schemes unless they opt-out.  The Telegraph claims that Duncan Smith is also looking at indexing the retirement age to life expectancy.

Education and welfare reform prove the Coalition's radical reforming credentials.  I wrote earlier this week that Michael Gove has won a measure of protection from the budget's austerities.  Duncan Smith hasn't, and thus faces severe challenges I'll return to in due course.  His pensions plan is a sign that he's undaunted.  He's making a major speech on pensions today, and we'll have more later.

Paul Goodman

12.30pm update:

Click here to read a short extract from Iain Duncan Smith's speech.

The DWP has now published this call for evidence on the issue of when the state pension age should be increased, as well as announcing a review of how best to support the implementation of automatic enrolment into workplace pensions.

3.15pm update:

Click here to read the whole of Iain Duncan Smith's peech

Jonathan Isaby