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To: maceng2 who wrote (860)	11/16/2005 8:23:39 AM
From: maceng2	Read Replies (1) \| Respond to of 1417

Just as a side note:- 2.7 million on incapacity benefit that is a number that needs to be tagged onto the unemployment figure to get the real unemployment rate. Really, we are worse now then the 1980's. -------------------------------------------------------- Blair set to back a raising of the retirement age By Philip Webster, Political Editor timesonline.co.uk TONY BLAIR is preparing to back plans to persuade people to retire later as a key weapon to combat the pensions crisis that will be revealed by an official report in two weeks. The Prime Minister is poised to present the Government’s welfare reforms, including attempts to slash the £12 billion incapacity benefit Bill, as part of the same package to deal with the pensions “timebomb” as he strives to secure public and backbench approval. Raising the retirement age from 65 to 67 would save billions of pounds over the next three decades. Mr Blair believes that getting more people off benefit and into work — there are 2.7 million on incapacity benefit — and persuading people to work later are the way to meet the problems posed by the fact that people are living longer with correspondingly larger pension needs. The Prime Minister is backing the option of raising the retirement age, but he accepts that the government case has been undermined by the deal with the unions last month to drop the idea of raising the pension age for three million existing public sector workers. The Times disclosed that Mr Blair was unhappy that the agreement made by Alan Johnson, the Trade and Industry Secretary, and the TUC was presented as a victory by the unions and sent out the wrong signal about reform. Although it will mean that the pension age for future public service workers will be raised to 65, the decision to back away from changes for existing workers appears now to be regretted by the Prime Minister. For every one million taken off incapacity benefit the Government saves almost £4 billion, officials say. A report by Lord Turner of Ecchinswell, the former director general of the CBI, will conclude on November 30 that the pensions crisis can be met by the increasing the amount of taxes devoted to them, requiring people to save more, achieving an increase in average retirement ages, or by a mix of all three. With the Treasury wary about devoting more tax revenue to pensions and a compulsory second pension virtually off the table during the present Parliament, ministers are erring towards the later retirement option. Measures are also being examined to persuade people to save more. Mr Blair argues that welfare reform and pensions reform should be linked. Encouraging people to work longer will delay their pension needs while they are at the same time paying their taxes and national insurance. Workers taken off incapacity benefit are not only reducing the liabilities of the state but also contributing through their taxes to the pensions of everyone else. Ministers will formally respond to Lord Turner’s report next spring, and John Hutton, the new Work and Pensions Secretary, has decided to delay the welfare reform paper till early in the new year, making it easier for the Government to present their proposals on both in an integrated way. The stark finding of Lord Turner’s interim report in October last year was that 12 million people were not saving enough and would see their pension income slashed by 30 per cent three decades from now. His report suggested that Britain had lived in a fool’s paradise for a quarter of a century because everyone had taken a booming equity market for granted. Mr Blair wants to build on changes to state and occupational pensions during the last Parliament which gave people pension benefits if they carried on working. People going on beyond 65 are now allowed to take a higher rate of pension when they retire or a lump sum payment based on their contributions during the extra years. Senior ministers now admit they took their “eye off the ball” over the public sector deal. Mr Johnson was acting within a remit agreed by the Cabinet to save £13 billion over 50 years. But he did it by securing the unions’ agreement to future public sector workers retiring at 65 with benefits lower than had been planned. The deal was suddenly disclosed by the unions and caught the Government on the hop. SHAPE OF THINGS Life expectancy for men at 65 has risen from 78 to 81 over the past 20 years. For women it has gone up from 82 to 84 The post-war baby boom means more people retiring between 2010 and 2015 but this will be paid for by raising women’s retirement age from 60 to 65 A baby boom between 1961 and 1968 will bring another tide of retirement between 2026 to 2033 The number of retired people is projected to rise by an average of 1 per cent per year while the population as a whole increases by 0.5 per cent Click here for news, advice and pension