Commentary: Pension flexibility is crucial

The suggestion that we should all, men and women, have to wait until we are 65 to receive the state pension is unnecessarily depressing. For women, especially those close to retirement age, it is disappointing, as they are currently entitled to a state pension at 60.

The Social Security Advisory Committee, which put forward this proposal, was motivated by the need to look after those on low incomes. Savings from raising women's pension age from 60 to 65 could be diverted to help them.

But the same savings could arise from introducing a flexible retirement age, say, of 10 years. This would allow men and women to choose when they retired anytime between 60 and 70.

There would have to be incentives to encourage an average retirement age of 65 (or older) in order to make savings. This could be done by paying a smaller pension to retirees at 60 than at 70.

The attractions of flexibility are huge. Despite complaints during their working life, people often decide they would prefer to continue working once retirement age approaches. They may need the money or they may fear endless uninterrupted days at home. Whatever the reason, some women want to continue working beyond 60 and some men want to continue beyond 65.

Equally, not all men want to work until the current state pension age, especially given the upheaval many face at work. Retiring early is often simpler than getting used to new working conditions.

Flexibility would make it easier to dovetail the state and private sector pension schemes, which range hugely in the benefits they offer. Two thirds of company schemes pay pensions to men from 65 but a quarter from 60. For women company schemes are equally split between 60 and 65. For all these reasons it is worth putting up with the complexity for the sake of flexibility.