Working longer could raise £13bn

Enabling people to work one more year after the state pension age could result in a GDP increase of 1% or £13bn, says L&G's Adrian Boulding

Speaking at the launch of the Centre for Retirement Reform, Boulding put forward his case for an increase in the state pension age saying such a move will enable people to work longer to pay off debt as well as raising their standard of living in retirement.

With the average debt per adult of £32,000, excluding mortgages, dwarfing average earnings of £24,000 and pension income of just £11,000 per year, Boulding said working longer could have a huge impact.

"If people worked longer, deferred taking their pension and used half of their extra income to pay down debt then they could do this within five years," he said.

Boulding advocated raising the state pension age to 70 and argued that such a change could be in place in as little as three years to take factors such as increasing longevity into account.

"These days people can spend up to a third of their lives in retirement and this was never considered when the state pension age was originally set," he said.

However, Boulding warned such a change would need to go hand in hand with an increase in the default retirement age to prevent older workers from being forced out by employers.