State pension age 'should increase to 70'

The Institute of Directors (IoD) has called on the Government to increase the state pension age to 70, and to introduce measures to simplify the pension system.

A new report launched by the business group sets out a radical reform agenda for both the state and private pension sectors.

According to the IoD, the pension systems in both sectors are so complex that many people are put off saving for retirement. Furthermore, significant increases in longevity mean that many individuals could find themselves lacking the necessary funds in retirement.

The report proposes four fundamental changes, including raising the pension age to 70 as soon as possible, and abolishing the state second pension and most means-tested retirement benefits, with the savings from this being used to top up the basic state pension.

Graeme Leach, IoD Chief Economist, said, 'Radical simplification is needed. Startling increases in longevity in recent decades also mean that it is unrealistic to expect to be able to fund a potential 25 to 30 year retirement from an effective 30 to 35 year working life'.

However, the TUC has warned that extending the state pension age would place the less well-off at a significant disadvantage, and could leave older people in the position of being too old to work, and too young to draw their pension.