U.K. Conservative Leader to Propose Retirement Age Shift

October 6, 2009 (PLANSPONSOR.com) - A U.K. political leader is expected to propose that the state retirement age for women and men be increased by 36 months and a year, respectively.

A report in the Telegraph newspaper said the suggestion fromGeorge Osborne, the shadow Chancellor, would go into effect 2016 – 10 years earlier than the effective date proposed by the Labor government. The Telegraph said that moving up the effective date of the increased retirement age will mean about 2.5 million people – aged 48 to 57 – will have to work at least a year longer than they were expecting.

Under the proposal, the retirement age for men will rise from 65 to 66 and the age at which women in their late 50s can claim their state pension will change from 60 to 63. The shadow Chancellor believes he can save £13 billion a year by moving the effective data earlier, with an extra £130 billion in total being raised by the move.

The newspaper said the announcement represents a political gamble by the Conservatives as Osborne risks alienating older voters. However, Osborne apparently believes the policy is important to demonstrate that his group has a serious plan to cut public debts, according to the report.

Prime Minister Gordon Brown is planning to increase the state retirement age for men from 65 to 66 but not until 2026. It will then rise to 67 in 2036 and 68 in 2046. The state retirement age for women will rise from 60 to 65 between 2010 and 2020 under the government’s proposals, the Telegraph said.

“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,” Osborne said, according to prepared remarks.