Tory pension plan is good move

by Ed Bowsher on 06 October 2009  |  1 comment
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The Conservatives' plan to raise the state retirement age to 66 in 2016 is sensible.

The Tories have said this week that they plan to raise the state retirement age to 66 in 2016. That's ten years ahead of the current plan. (At the moment, the retirement age is supposed to go to 66 in 2016, 67 in 2036 and 68 in 2046.)

I think the Tories are right to do this. Obviously this measure isn't going to make any impact on the government's deficit during the next seven years, but in the longer-term, pensions are going to be a huge burden for our society, so we need to start taking action within the next decade. We mustn't wait too long.

So well done to George Osborne on this. Where I disagree with Osborne is on his keenness to start pushing down on the deficit as soon as he takes office. There are a few things that could be done immediately - such as low public sector pay rises or even pay freezes - but if big cuts start immediately, we run the risk of choking off a fragile economic recovery. And choking off the recovery will reduce tax revenues and do much more damage to the government's finances in the end. Tax rises and spending cuts can wait until 2011.

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