Tiny increases each year would still leave a wholly inadequate state pension according to Ms Altmann.
She proposed paying a much higher level of flat rate basic pension, perhaps from an older age such as 70 or 75, but keeping existing limits for those below this age.
At the same time, part-time work would need to be facilitated and age discrimination outlawed so more can stay in the labour force.
Ms Altmann warned failure to do so would result in much lower growth, much higher pensioner poverty and potential political and social unrest.
She said: "Pension policy has lagged hugely behind changes in life expectancy and, although women's pension age is already set to rise to 65 by 2020, the changes being implemented are so slow that policy is still lagging behind life expectancy.
"Policy should have increased pension age in the past, whilst maintaining or improving the state pension as well. It has done the opposite:
"Instead of maintaining the value of the state pension, but increasing the age at which it starts, politicians kept cutting the state pension, to make it more affordable.
"It is now far too low.
"We need to get away from the idea that there is any one particular age beyond which people can suddenly do no work.
"We should ensure that a whole new phase of life opens up, when older people remain economically active, but do not have to struggle to work full-time."