Retirement
State pension plans ‘unaffordable and irresponsible’
Government plans to increase state pension expenditure have been branded “unaffordable and irresponsible” by a leading think tank.
The Institute for Economic Affairs (IEA) said the Government should speed up the introduction of a later retirement age and “urgently” reform labour market regulations to enable people to work longer.
It outlined ten policies which could alleviate the fiscal problems caused by an ageing population, including the introduction of compulsory private pension provision to replace the state pension.
The IEA said this initiative had successfully alleviated pressure on the public finances in Australia.
Other proposals to ease the “state pension time bomb” include linking retirement with life expectancy and exempting older workers from employment protection legislation to incentivise employers to take on older workers.
Professor Philip Booth, editorial and programme director at the Institute of Economic Affairs, said: “The government needs to wake up to the reality of the long-term state of the public finances. People retire earlier on average today than they did in the 1960s despite huge improvements in life expectancy. People should have both the opportunity and incentive to continue some form of paid work into older age. Policymakers must urgently implement a coherent package of reforms, including a more rapid increase in the retirement age and a substantial reduction in employment protection legislation which is especially damaging to older people.”