Retire at 68? Three-quarters of us will be too ill to even work that long...

Plans to raise the retirement age to 68 will cause hardship for millions because three-quarters of people could be too ill to work, a Government-commissioned report warns today.

All but the richest Britons are dying early and suffering years of ill health because of "unfair and unjust" inequalities. The richest live seven years longer than the poorest and enjoy an extra 17 years of good health, according to the review led by Professor Sir Michael Marmot of University College London.

Life expectancy for the worst-off has improved by 2.9 years in the last decade, but much more needs to be done if the retirement age is to be raised to 68, warned the report, Fair Society, Healthy Lives.

Health inequalities are normally associated with the poorest in society, but everyone except those at the top is affected, it concluded.

Up to 2.5 million years of life are being lost each year in England as a result of poor people dying prematurely, the report estimated.

The gap between the lifestyles of the rich and poor is having a major impact on the chances of living a long and healthy life, it suggested.

Sir Michael said: "There will be those who say that our recommendations cannot be afforded, particularly in the current economic climate.

"We say it is inaction that cannot be afforded – the economic and, more importantly, human costs are simply too high."

The previous Inquiry into Health Inequalities in England was published in 1998. However, the gap between rich and poor has not closed since then despite a range of policies aimed at tackling the problem.

Today's report calls for an overhaul of the tax system in order to redistribute money to the poor, arguing that the poor pay a higher percentage of their gross income on tax because of indirect taxes such as VAT and duties on alcohol and cigarettes.

Ill health is more likely to strike the unemployed so getting people into work is of "critical importance" in reducing the gap between rich and poor, the study said.

Although tax credits have lifted half a million children out of poverty since 1998, it is "imperative" that the benefits system does not act as a disincentive to working.

Sir Michael's report called for action in six key areas, including spending more on supporting children in their earliest years, creating fair employment and encouraging people into work, and doing more to stop people falling ill in the first place.

The Government plans to raise the state pension age because millions of workers are not saving enough to meet their retirement expectations. Under the current plans, the state pension age for women will gradually rise from 60 to 65 over 10 years from 2010. It will then continue to rise, for both men and women, from 65 to 68 between 2024 and 2046.

However, many have called for a faster rise. And the Conservative party, Lord Turner – author of the influential Pension Commission report – and the Institute of Directors have called for more radical measures to be adopted to plug Britain's budget deficit.

The Conservatives have accused Labour of failing to tackle inequality. Theresa May, the Conservative equalities spokeswoman, said: "It is unbelievable that Labour thinks it can claim to be the party of aspiration when its failure to tackle the causes of poverty has let down so many lives.

"Conservatives will tackle the causes of poverty and inequality, not just the symptoms, through radical policies to address educational failure, family breakdown and worklessness."

Andy Burnham, the Secretary of State for Health, welcomed the report. He said: "It is not right that where we live can dictate the state of our health. Everyone should have an equal chance at good health. I am passionate about getting to the heart of this issue and ensuring that young people can look forward to the same life expectancy regardless of where they are born."