Therese Coffey said the extra revenue could also be passed on directly to young low-paid workers in the form of a National Insurance holiday.
With the removal of the default retirement age, more people are expected to work for longer, but those over 65 who continue in employment do not currently pay National Insurance on their earnings.
According to Treasury estimates, up to £2 billion could be raised by changing the rules so pensioners pay NI.
Ms Coffey said the extra revenue could be passed on to under-25s on less than £20,000 a year. She said it could be worth an extra £375 a year to an 18-year-old on the minimum wage of £4.98 an hour, while saving their employer £450.
The backbench MP for Suffolk Coastal said she was hopeful the idea could be adopted, particularly if the, Chancellor George Osborne, merges income tax and National Insurance.