Monday, October 5, 2009

'Retire at 66' under new Tory plans

Millions of middle-aged workers are to be forced to wait an extra year before collecting their state pension under plans to be announced by the Conservatives.

In a bold measure that risks alienating voters currently in their 50s, George Osborne is to warn that a planned rise in the pension age from 65 to 66 must be brought forward by up to a decade.

The move would allow him to reduce Britain's massive deficit by £13 billion a year as a Tory government grapples with the nation's dire finances, the shadow chancellor will say.

In his keynote speech to the Conservative Party conference in Manchester, he will say that the change is the price of re-establishing the link between earnings and the basic state pension.

The announcement comes as the Tories are desperately trying to shift the focus from their internal divisions over Europe at their last annual gathering before the next General Election.

While the move will not enthuse those forced to postpone retirement by 12 months, the party is gambling that the public will vote for a party that is honest about the challenges ahead.

But Mr Osborne is also under pressure to detail where Tory spending cuts will fall as they seek to bring down the deficit in the next Parliament.

The pensions commitment will only bring in additional revenue from 2016 at the earliest.

Mr Osborne is expected to say: "Let me affirm today that in the next Parliament we resolve to restoring the earnings link for the basic state pension. But this is another one of those trade-offs any honest government has to confront. All parties accept that to afford that with an ageing population, the state pension will have to rise."

Under current Government plans, the pension age is set to rise from 65 to 66 in 2026. The women's pension age will start rising next year from 60 until they are gradually aligned with the men's by the end of the decade.

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