Raise retirement age to 70, says the CBI

The CBI is calling for the Government to raise the UK retirement age to 70 and to increase the basic state pension.

Among a range of reform ideas the employers' group today calls for the pension age to rise from 65 to 70 over the decade to 2030.

It also calls for the basic state pension to rise by about 30 per cent to more than £100 a week to prevent "widespread pensioner poverty" in future.

The CBI says that the country's creaking pension system needs help, particularly among small and medium-sized firms.

Although it admits the measures would see government spending rise, the group is also urging the government to give British companies and their employees tax breaks, aimed at boosting national savings. "Overwhelmingly, employers remain committed to pensions and have responded as well as they are able to, given the difficult circumstances that have confronted them," says Richard Greenhalgh, chairman of the CBI's Pensions Strategy Group and Unilever chairman.

The three-year stock market slump from 2000 that wiped millions off asset values has put enormous pressure on the pension funds and insurance policies.

Mr Greenhalgh says that paying for the shortfall diverts money from wealth-creation and harms the overall economy.

This has resulted in hundreds of firms closing finalsalary pensions to new staff, forcing employees to shoulder market risk at a time when there is increasing concern over how to provide pensions to an ageing population.

Mercer Human Resource Consulting says that pension funds face an estimated ?330 billion shortfall.

The TUC has called for compulsory pension contributions by both employers and their staff to safeguard future claims.

But today's CBI report rejects that proposal saying that all it would do is reduce savings elsewhere.