Britons will wait until they are 68 to begin claiming a state pension under proposals put forward by Lord Adair Turner's Pensions Commission, which released its report today.

The long-awaited study, which only last week was thought to be in peril after reports out of Whitehall suggested chancellor Gordon Brown would scupper the proposals because they were 'unaffordable', has said that the state pension age should gradually rise in line with growing life expectancy rates.

The report suggests that the claimant age could increase to age 66 by 2030, 67 by 2040 before levelling off at 68 by 2050.

Basic pension packages, however, must also rise from 2010 in line with workers' earnings, the Commission said.

Lord Turner's Commission has spent three-years reviewing and revising the state pensions system, and Turner said it faces "significant problems" that will worsen if action is not taken.

"The problems in our pension system will grow increasingly worse unless a new pensions settlement for the 21st century is now debated, agreed and put in place," Lord Turner said.

However, he added that the process of debate and implementing change will undoubtedly take time claiming it would be difficult to get some proposals, such as the National Pension Savings Scheme, fully operational before 2010.

Under the Scheme, dubbed 'BritSaver', employees would automatically enter into a national savings plan comprised of compulsory contributions of 3% of a worker's salary each from employers and employees. The scheme would also provide tax relief equivalent to 1%.

"The proposed three percent compulsory employer contribution will be a tax too far for small businesses," said Carol Undy, national chairman of the Federation of Small Businesses (FSB). "The bottom line is that most small employers simply cannot afford it and would be forced to make damaging cuts in other areas."

The country's insurers, meanwhile, backed the proposal and said the private sector can lead the way toward reform.

"We don't need to create a new, expensive and risky state quango; we should use the expertise and infrastructure of our existing private sector to put this vision into effect," said Stephen Haddrill, director general of the Association of British Insurers (ABI).

"Doing so will give Britain a head start. Adair Turner questions whether the private sector can do this at an acceptable cost. Provided that we are asked to deliver the same service under similar conditions, we believe that we can."