vallierojas: Work longer: new pension bombshell for under 50s

Moves to keep up with 'express train' of life expectancy could mean retirement age rising to 67 as early as 2026

The government will bring forward an increase in the state pension age to 67 under radical plans designed to prolong the working life of millions of people aged 50 and under.

Ministers are already pushing controversial changes through parliament to raise the age at which men and women can claim a pension to 66 by 2020. Now, as the government moves to keep up with the "express train" of life expectancy, the retirement age could rise to 67 as early as 2026.

Steve Webb, the pensions minister, has told the Observer that further moves are necessary and the coalition government will rip up the former administration's timetable, under which the pension age was to be increased to 67 in 2036 and 68 by 2046. Webb, a Liberal Democrat, indicated that he was not seeking merely to tinker with the timescales. He said: "The timescales for 67 and 68 are too slow. If it is 67 in the mid-2030s we will be going backwards in terms of share of your life in retirement. I mean the problem would be worse than 20 years before."

The raising of the state pension age to 67 in 2026, the most likely option according to Whitehall sources, would affect 8.1 million people in their 40s who would otherwise have expected to retire at 66.

It will also dismay the public sector unions, meeting at the Trades Union Congress on Monday, who are already close to endorsing mass strikes over the government's intention to ask their members to pay higher contributions while working longer for what they believe will be smaller pensions.

But, likening the recent flurry of government activity over pensions to the bursting of a dam, Webb said previous governments had failed to address a huge increase in life expectancy which is said to be rising by an average of two and a half years every decade.

He also defended the pensions bill currently going through parliament, which increases women's pension age to 65 in 2018, before rising to 66 in 2020 in parallel with the male retirement age ? a move which gives 330,000 women just seven years' notice on up to two extra years in work before retirement.

And in his first major interview since the government closed this summer's consultation on whether further reforms to the state pension age were necessary, Webb said it had become clear that more needed to be done to avoid a major pensions crisis.

"We are going to get some new figures next month. We get them every two years, and you just know what they are going to say," he said. "Everybody knows we are living longer. It is like an express train. I am even more convinced now than I was a year ago that we are running to standstill on all this stuff.

"In a world [where] you are going to live into your late 80s, and before we know it [into your] 90s, we think now we have got to move on these things.

"In a way, successive governments over the decades were so behind the curve behind all this. If you think of male pension age, it hasn't changed for a century. How much has life expectancy improved in a century? So, in a way, what is going on is a big dam that is finally breaking."

The move to quicken the pace of changes to the retirement age follows the recent decision by the Netherlands to raise its pension age to 67 in 2025. According to Department for Work and Pensions figures, the move, if repeated in the UK, would save a total of �59.3bn, money which the government could use to help the women most severely affected by the recent and swift rise in the age of eligibility for a pension.

Nineteen Liberal Democrats ? a third of the parliamentary party ? are among 161 MPs who have signed a motion opposing the plans to raise the female pension age by 2020, while increasing numbers of Tory MPs have voiced their concerns.

However, Webb, while confirming that the government was seeking to find concessions to help those worst hit by the most recent pension changes, denied that an earlier move to a pension age of 67 was linked to it.

He said: "In a sense I don't specifically link the two. The principles of the bill are right, faster equalisation at 66 sooner, [but] there is a particular group badly affected, [so] we will ease the transition.

"Issue two: we have to do something about [ages] 67 and 68. We consulted on the green paper on a kind of mechanism [to set future changes] and we are reflecting on that."

On Saturdaycampaigners cautiously welcomed the government's stance, but said that a decade's notice ought to be given to people if the change, which would be likely to come before the Commons in the next parliament, went ahead.

Michelle Mitchell, charity director of Age UK, said: "Any increase to the state pension age needs to ensure that people have enough time to plan for the change ? Age UK believes that people require at least 10 years' notice.

"That is why we are unhappy with the pensions bill which, as it stands, will speed up changes in the state pension age resulting in 330,000 women having to wait an additional 18 months to two years, with insufficient time to change their retirement plans.

"We understand that, with increasing life expectancy, the state pension age needs to be considered, but it is essential that before any changes are introduced there is clear progress on reducing health inequalities.

"We also believe that the process of deciding the state pension age should be informed by independent advisers considering a range of factors.

"Rising life expectancy is to be welcomed, but we must ensure that any changes do not disproportionately disadvantage those who struggle in society."

Daniel Boffey