Call to clarify plans for retirement age of 70

Ministers were urged today to come clean about plans which would force millions of people to work until they are 70.

The Cabinet is split over whether to lift the retirement age from 65 to 70 or scrap the cutoff point altogether.

Unions have warned the changes could rob millions of people of their chance for an early retirement. A leaked letter by Trade and Industry Secretary Patricia Hewitt revealed the extent of the divisions on the issue. She said there "has not been consensus" about the best way forward and there were still "different perspectives".

The Government must introduce changes to the retirement age by October 2006 to comply with the European Employment directive. The issue is understood to have pitched Ms Hewitt, who favours lifting the age to 70, against pensions secretary Andrew Smith, who is campaigning for lifting the retirement cutoff point altogether.

Although the reforms would not affect the age at which people can claim their state pension, it could have serious implications for companies who could lose the right to set their own retirement ages.

Unions have said that raising the retirement age to 70 would mean more than 20 per cent of people - and nearly a third of men - would die before getting their pensions. Business leaders have also called for more Government clarification.