Everyone to work an extra year to pay for bank blunders, say Tories

Everyone will have to put off retirement for a year to help pay for the massive financial mess sparked by banks making risky investments, according to controversial plans from the Conservatives.

Shadow Chancellor George Osborne is proposing to increase state retirement age from 2016, 10 years earlier than the Labour government plans.

This will affect about 2.5 million people - aged between 48 and 57 - who will have to work at least a year longer than they were expecting before they can retire with a state pension.

Labour plans to raise the state retirement age for men from 65 to 66 in 2026. After that, the retirement age will continue rising to 67 in 2036 and 68 in 2046.  For women, the state retirement age rises from 60 to 65 between 2010 and 2020.

Osborne wants to speed up the process by changing the age thresholds at least 10 years earlier than Labour. Everyone over 30 will have to work at least a year longer to receive their state pension.

The Tories say they can save £13 billion a year with the move.

Mr Osborne is expected to tell the Tory party conference: “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.

“The women’s pension age is already set to start rising next year to 65, and then in 2026 the pension age for men and women will go up to 66. Most experts now think that is too far off.

“Our aim will be to bring forward the date when pension age rises. We will ensure that no increase will happen until the second half of the next decade, in the Parliament after next.

“No one who is a pensioner today, or approaching retirement soon, will be affected. But this is how we can afford increasing the basic state pension for all.”

Lord Turner, who is now the head of the Financial Services Authority, reviewed the state pension process in 2005 and considered the state retirement age should rise to 70 years old by 2030.  He said in July: “If I was redoing my report I would be more radical, arguing for an even faster increase in the state pension age.”

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