Former FSA chairman Lord Adair Turner is calling for the state pension age to rise to 70 by 2040 as he set out a radical pensions agenda which included compulsory saving and support for higher contribution rates of up to 16 per cent.
Lord Turner chaired the Pensions Commission in 2005, a review which paved the way to the current automatic enrolment reforms.
Speaking at an event held by think tank Policy Exchange in Westminster last night, Turner set out a radical agenda on charges, super-trusts and much higher contribution rates.
He called for an acceleration of state pension age increases to 70 by 2040. The Government plans to increase the state pension age to 69 in the late 2040s.
Turner said: “I would have liked to go further in the commission at the time and I suspect we should go further still. I think [age] 70 by 2040 would be a good thing.”
In a wide-ranging speech, Lord Turner called for major changes to pension reform by signalling support for compulsory pensions saving and contribution rates as high 16 per cent per person.
He said: “When we did auto-enrolment our attitude was the art of the possible and we liked the idea of an opt-out. Maybe there are ways we can make it even more presumptive so you are in unless you can really prove you need to be out.
“If we move to compulsion and higher rates then it is even more important people get good value for money. We are not helping people by compelling them to save and allowing the asset management industry to take large fees. Fees matter a lot.”
Lord Turner said compulsory saving would require more economies of scale to keep fees low as he backed super trusts or a Swedish-style state run scheme.
He said: “The more we go down compulsion the more we have to use the power of the state or super trusts to really end up with low asset management charges. We cannot compel people to save and then start taking money off them too.”
Lord Turner also supported the dropping of Nest restrictions claiming it was an “unfortunate compromise” with the pensions industry.
The Pensions Bill forces the Government to review the state pension age every five years and link it to life expectancy. Chancellor George Osborne has previously said individuals should spend up to one-third of their lives in retirement.