One million women losing out after state pension age increases

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, economists have found.

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 was saving the Government billions, but hitting the household incomes of women affected.

Although the increase in the state pension age had boosted employment, as more women stayed in work, the extra wages only partially offset the potential pension income they would have received.

Some 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 are receiving 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.

“After accounting for behavioural change, we find public finances are strengthened by an estimated £5.1bn per year, of which £4.2bn comes from lower benefit payments (net of tax, where applicable) and £0.9bn from higher direct tax payments elsewhere.”