BRITAIN: Retirement Age Will Rise to 68 in New Pension Deal

LONDON (The Independent), May 13, 2006: People who retire after 2024 will have to work longer to qualify for the basic state pension in return for more generous payments rising each year in line with average earnings. The state pension age will rise from 65 in 2024 to 68 by 2050, with payments linked to earnings instead of prices, which rise more slowly. The move will restore the link abolished by the Thatcher Government 25 years ago. The deal is a compromise between Tony Blair and Gordon Brown after a battle between them over whether to implement a blueprint on pensions last November by a commission chaired by Lord Turner of Ecchinswell. He recommended that more generous annual increases in the state pension should start in 2010 but Mr Brown was worried that the cost could force a rise in taxes. He has delayed the start date until 2012 to give the Government more time to find the necessary savings. Whitehall insiders said the 2012 compromise was proposed by John Hutton, the Work and Pensions Secretary, who will unveil a White Paper on pensions on Monday week. It will include a boost for women who act as carers or give up work after having children. Women are expected to qualify for a full state pension after 30 years' work instead of 39 as at present. Legislation will be included in the Queen's Speech in November, allowing Mr Blair to hail a long-term solution to the pensions crisis as part of his legacy when he stands down. By Andrew Grice Political Editor