Women waiting longer to retire adds £5bn to pot

MAKING women wait longer to collect the state pension has boosted government coffers by more than £5billion a year already, experts have calculated.

However the change has left more than a million older women’s households an average £1,664 a year worse off because earnings as they keep working do not wholly make up for foregone pensions and linked benefits.

The Institute for Fiscal Studies analysed the impact of the rise in the female state pension age on women aged between 60 and 62.

The age at which women can claim a state pension is due to reach 65 – in line with men – by November next year.

To keep pace with life expectancy, the pension age for both will rise to 66 by October 2020, to 67 by 2028 and to 68 in the following decade, further boosting the Treasury as it pays fewer pensions and collects more tax.

The Institute says the rise in women’s pension age to 63 has meant 1.1 million fewer receiving the benefit.

This saves the public purse £4.2billion in unpaid pensions and other benefits such as winter fuel allowance.

Losses

For women aged 60 to 62, employment rates have substantially increased, boosting their pre-tax earnings by £2.5billion in total and adding £900million to the tax take.

Taken together, reduced pensions and benefits offset by higher earnings meant an average net loss of about £50 a week in terms of personal income and £32 a week for the household.

But the losses disappear once women reach retirement and get the pension and higher benefits.

The Institute also reports no evidence of higher “material deprivation” in which people cannot afford home maintenance, replacing goods and personal money – suggesting they are coping with the reform by planning.

Meanwhile, a rise in the age single men can claim Pension Credit, from 60 to 63, has cut benefits to those aged 60 to 62 by an average of £21 a week.

Last night Carl Emmerson, of the Institute, said: “Increased longevity means that, on average, [women] can expect to receive the pension for 25 years which is as long as women reaching the pension age at 60 in 1993. ”The Government remains under pressure from “Waspi” women: Women Against State Pension Inequality born in late 1953 and 1954 who say they did not get enough warning of the reforms.

A Department for Work and Pensions spokesman said: “By 2030, more than three million women stand to gain an average of £550 extra per year.”