Illustration by Claudio Munoz

FOR generations, the idea of raising the state-pension age was political taboo. A reform to equalise the age for women (currently 60) with that of men (65) has long been scheduled for the next decade. But politicians of all persuasions shied away from raising the age beyond 65, even though it was originally set in 1925 when life expectancy was much lower.

That taboo was broken in 2005 when a special pensions commission chaired by Adair Turner (now in the hot seat at the Financial Services Authority) called for the retirement age to rise to 68 by 2050. The Labour government backed the proposal, but the timetable remained leisurely. Not until the mid-2020s would the first move, to 66, take place. The state-pension age would then rise to 67 a decade later and reach 68 in the mid-2040s.

Now the Conservatives want the first step to begin a decade earlier, in 2016. A reform raising the retirement age then by a year for both men and women could save £13 billion, worth some 0.7% of GDP or £10 billion in today's money. The savings would come from both lower pension spending and higher taxes paid by those working an extra year.

However, the reform is less ambitious than it first sounded. The Tories have clarified that it would not start until 2016 for men and 2020 for women, when their state-pension age will have reached 65. As a result, the full saving will come through only in the early 2020s, not that much sooner than the existing plan. Even in the case of men, the reform will not reap gains for the exchequer until after the next parliament, which will run until 2014 or 2015.

In the longer-term, the potential gain from raising the state-pension age hinges on how many people actually work an extra year. The Tory estimate assumes that two-thirds of them would, but that may be optimistic. Changing the state retirement age is not enough. Attitudes have to change, among both employers, who need to drop ageist prejudices, and older workers, who must keep honing their skills and learning new ones.

Although the Conservatives have presented their reform as a way to plug the hole in the public finances, it really represents a longer-term response to the fiscal costs of Britain's ageing population. As the IMF has pointed out, these potentially dwarf the budgetary bill for the current economic crisis. Among the OECD club of 30 mainly rich countries, only three—Iceland, Norway and America—now have retirement ages higher than 65. Britain is one of four others that have announced steps to raise it above 65. The new Tory proposal merely accelerates that process.