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Ex-FSA chair calls for state pension age to rise to 70 by 2040

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.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Nice for someone who no doubt has a gold plated pension in place to attack the poorest sections of the population.

    I am quite lucky in having a desk based job so working to age 70 probably wouldn’t be a problem but what about all those who have manual jobs?

    All this will do is move the problem from the pension pot to the job seekers allowance pot – no actual change to the cost to the economy.

  2. 2040?? Why not 2015? If you bother to look Pensions in the UK started around 1910 at which time the pension age was 70! At the time the average longevity for a male in the UK was around 47 – skewed by infant mortality. But by 1930 it was still only 60 and by 1950 it was 65.

    In 1925 the SRA was reduced to 65 and it wasn’t until 1940 that the SRA for women was 60. (Odd because in those days women lived significantly longer than men).

    The above figures clearly show that the State was not paying out (on average) for very long (if at all in many cases). By this measure 70 is very reasonable. In addition today we have age discrimination laws. It is probably cheaper to have a measure of youth unemployment than to pay pensions from 65. The side effect could well be a better inheritance expectation for the young. The net result would probably be less strain on the Exchequer, probably a better pension when you get it and a better GDP. So why wait till 2040?

    If you are going to wait that long it only makes real sense if you are going to build up a significant Sovereign Wealth Fund over the period to help fund the income. We can then expect AE to have a limited life.

    But then why would one expect a dilettante like his Lordship to understand this?

  3. Lord Turner, who will likely be dead by then (as will I probably), after living several decades on the fruits of his massive non-contributory pension says…….

  4. Fetch me my mead serf!

  5. back in 1990 I attended a business meeting at Royal Life company convention with over a hundred and fifty other delegates one of the topics centred on retirement age and the funding or lack of it both for state and private provision, the issue surrounding the affordability of state pensions has been know for a long time, it was obvious that action was required but no Government of any flavour would grasp the nettle at that time. With people living longer the funding requirements will continue to increase, merely tinkering around the edges with pension legislation and continual moving the goal posts for advisors hasn’t solved the problem. I doubt this of any Gov would be prepared to tell the people how much it will cost to fund pensions before an election.

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