Shadow Chancellor George Osborne has announced that should a Conservative Government be elected, the UK can expect a review of the current State Pension Age, with a view to raise it for men to age 66 by 2016.

Osborne officially proposed the measure on 6 October at the Conservative party's annual conference in Manchester, which would also see the State Pension Age for women rising to 66 no earlier than 2020. Under the current Labour government, the State Pension Age would rise to 66 for both men and women between 2024 and 2026.

The current Pensions Act (2007) which introduced the idea of raising the state pension age, was formed largely on recommendations made by Lord Turner's Pensions Commission, and would save the UK an estimated £13bn every year.

John Ball, head of defined benefit pension consulting at Watson Wyatt, said that it was always naive to assume that the Turner settlement would last for 50 years.

"The Conservatives supported the 2007 Act but you can think a policy makes sense with public sector debt at 39 per cent of GDP and realise it has to change when debt is going to be twice as big. A future review could look at how to link State Pension Age to life expectancy in the long-term. The 2007 Act assumed State Pension Age could go to 68 and never have to rise further and did not say there would be an accelerated timetable if life expectancy improved more quickly than expected," Ball added.

John Broome Saunders, actuarial director at BDO Investment Management, suggested that the news might help out the private sector's troubled defined benefit schemes. He said that employers could then follow a possible Conservative policy and increase the normal pension age of private sector final salary schemes.

"For companies running final salary schemes, that would be the first piece of good news in a generation - we might yet see Finance Directors singing and dancing in the streets," he said.

The National Association of Pension Funds' chief executive, Joanne Segars, added: "Rising longevity, and the increasing costs of state pensions, raises some serious issues about the age at which the state pension should be paid and about the timing of any increase in the state pension age. The review announced today will help address these questions. However, there are some difficult matters that must be resolved, not least is the timing of the increase in women's retirement ages.

"It is vital that the review is also extended to consider what positive measures and flexibilities could be introduced to help support workplace pensions.

"We look forward to participating in any future review."

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