It seems the Turner report on UK state pensions is to recommend restoring the link betwen pensions and average earnings, to be paid for by raising the retirment age to 67.
Raising the retirement age is essential and has been put off for too long. It is an obvious nonsense for people to think that they can fund 20+ years of retirmement without major personal savings. The criminal fraud of the current pay as you go system exacerbates, but does not create, the problem. The retirment of the baby boomers is sure to shatter the system completely.
The question is, how do we get from here to the desirable situation - fully funded pensions for people over 70. The involvement of the state has done nothing but transfer funds from those (mostly poor) people who start work young and die young to those (mostly rich) who start work later and live longer.
The fact that few people depend solely on the state pension is a major advantage. Many have other pensions. Most others have means tested benefits on top of their pensions.
This means it would be quite reasonable to move more quickly than most politicians are prepared to contemplate. If we were to reduce pensions for those 65 to 70, even on a short timescale, those dependent solely on state benefits would make back everything they lose on entitlement benefits by greater means tested benefits. This also means the savings to the taxpayer will be lower, but the important message will nonetheless be broadcast.
How is this for a start:
1. A freeze on entitlement payments to those 65 to 70. Given low inflation rates this will only slowly wither away.
2. A right to delay your pension and take an enhanced rate at a later date.
3. An above inflation annual increase for those above 75.
4. An increase in the tax write offs available for people taking out private pensions, especially for those over 50.
5. A clear announcement that those under 50 should not expect to retire solely on the state pension.
