Million women lose out in state pension age rise
MORE than a million women are worse off by an average of around £32 a week as a result of the increase in the state pension age, according to Britain’s most respected economic think tank.
The Institute for Fiscal Studies (IFS) found that the increase in the state pension age for women from 60 to 63 between 2010 and 2016 saved the Government billions but hit women’s household incomes.
The increase in the state pension age boosted employment, with more women staying in work, but the extra wages only partially offset the potential pension income they would have received.
Around 1.1 million fewer women are receiving a state pension as a result of the age increase and the Government is spending £4.2bn a year less through pension and other benefits payments.
Affected households receive around £74 a week less in pension and other benefits as a result.
But employment rates among the group have substantially increased, boosting their gross earnings by a total of £2.5bn – and providing a further £0.9bn of tax revenue for the Government.
The IFS report said: “Overall, we
find that increasing the state pension age from 60 to 63 reduces the net household income of women aged 60 to 62 by an average of £32 per week, with an increase in earned income partially, but not entirely, offsetting the loss of state pension income.”
The impact of pension changes on women has attracted fierce controversy and great attention. The Women Against State Pension Inequality (Waspi) campaign does not oppose the equalisation of pension ages but claims the acceleration in the changes for women born in the 1950s has led to retirement plans being “shattered with devastating consequences”.
Waspi director Jane Cowely said: “Once again, this shows that the Government has implemented State Pension Age reforms without adequately considering the full impact of these changes on the women affected.
“Whether it is the 3.5 million Waspi women who were not given sufficient warning of rises to their state pension age, or the sharp rise in income poverty among 60 to 62-year-old women, the Government needs to sit up and start realising that its changes have devastating consequences on the women affected.
“Yet again, it is women who are paying the price for the Government’s pension reforms. This simply isn’t good enough when the UK already has one of the biggest pension pay gaps in Europe.”
Plaid Cymru Afron MP Hywel Williams said: “The problem is not that raising the state pension age for women is unfair – most of us agree that the state pension age should be equal for both men and women. The problem is the irresponsible and damaging way in which it is being raised...
“While I’m sure the British Government is pleased that it has delivered billions of pounds for them to spend elsewhere, they must recognise the injustice of their actions and the financial hardship it is causing.”
A spokesman for the Department of Work and Pensions said: “The decision to equalise and increase the state pension age is both fair and sustainable for future generations and in line with continuing rises in life expectancy. Women retiring today can still expect to receive the state pension for over 24.5 years on average – which is more than any generation before them and several years longer than men.
“By 2030, more than three million women stand to gain an average of £550 extra per year as a result of the new State Pension.”
Alex Cunningham MP, Labour’s Shadow Work and Pensions minister, said: “The Government must learn the lessons from their failure, before they bring forward their state pension age increase to 68, which will see 7.6 million people lose out by nearly £10,000 each.”
THE Government announced last month that those of us born between 1970 and 1978 will have to wait until we are 68 to claim the state pension.
This announcement, which came as MPs looked forward to the summer recess, will affect around seven million people and result in the pension age increasing seven years earlier than previously planned.
It was not greeted with riots in the streets but more of a shrug of the shoulders. Many in this generation lack the gold-plated final pension schemes their parents have enjoyed and they already have plenty to worry over without fretting about having to wait an extra year to start claiming this universal entitlement.
For people who are focused on immediate housing costs and the challenge of the working week an event so far into the future can seem but a speck on the horizon.
But millions of older people are already affected by the increases in the state pension age and there is cause for concern.
The highly respected Institute for Fiscal Studies has found that more than a million women are worse off by an average of around £32 a week.
The policy is working to the extent that it is saving the UK Government billions but women are having to stay in employment longer with the extra wages only partially offsetting the pension income they would have received.
Public finances have been boosted by £5.1bn a year. This comprises £4.2bn from lower benefit payments and £0.9bn from taxes.
A country is much more than a giant balance sheet and the social consequences warrant close and urgent consideration.
The IFS found that “the reform increases income poverty rates among households containing a woman who has reached age 60 but has not yet reached her state pension age”.
However, it found “no evidence of increases in other measures of material deprivation”.
There is great concern about the impact of the accelerated moves to equalise the pension age for males and females – particularly for women born in the 1950s, as demonstrated by the strength of support for the Women Against State Pension Inequality (Waspi) campaign.
It claims that the changes have resulted in retirement plans being “shattered with devastating consequences”.
The role played by older people in providing care – for grandchildren, spouses, parents and others – saves the public pursue billions and makes it possible for others to go out to work. The increase in the state pension age will make it harder for millions of people to leave the paid workforce and provide such services; in the longterm, this could put new pressures on the public purse.
As has been demonstrated in successive elections, older people vote and governments alienate this powerful swathe of the population at their peril. If the policy is shown to be botched and unfair the Government should rightly fear a backlash from across the generations.