Women's state pension implications explainedFriday 28 January 2011
Women's state pension implications explained
Dr Ros Altmann, a leading economist and director-general of over 50s organisation Saga, says that the UK’s 500,000 older women are on a collision course with government pensions policymakers.
“Handbags at dawn will be as nothing once the penny drops with hundreds of thousands of UK women and it hits home that the retirement for which they have planned for decades in some cases is going to be a very different one – not just delayed, but also under-funded. And worse still, for the vast majority it is far too late to make contingencies,” said Dr Altmann. (Video 1)
“Across the country I’m hearing from women who are enduring that sudden sickening realisation that their destiny in retirement is not in their own hands – this is not about fairytale luxury retirement villas, this is about affording the basics. And they can do absolutely nothing about it.
“Proposals to increase the state pension age for women to 66 by 2020 seem to have unfair and disproportionate consequences for a significant number of women already past their mid 50s who have no time to make up for the lost pension income they have been expecting. (Video 2)
“Around 500,000 women already over 55 will see their pension age rising by more than one year – and that is on top of increases of three or four years that they were required to accept in the 1995 Pensions Act. They were assured by the new Government last year, in its Coalition Agreement, that women's pension age would not rise again before 2020, those assurances have been broken.
“As part of the measures to cut government spending, the coalition announced that women's state pension age – which is already being increased from 60 - will rise even faster than expected to 65 and then rise again to 66 by 2020.
“This means that between 2010 and 2020, women's pension age will increase by six years, while men's pension age will be raised by just one year. These new extra increases for women start from 2016, but for men the increase is just one year and only starts from 2018.
“These changes were not mentioned before the election and, indeed, the Coalition Agreement stated that women's state pension age would not rise further before 2020.
“Hundreds of thousands of women will be affected adversely. These women were told, some years ago, that their pension age would increase from 60 to around 63 or 64. They accepted this change without fuss and set about planning their finances in anticipation of receiving their state pensions later than previously expected. (Video 3)
“But the Government has suddenly moved the goalposts on them. From 2016 onwards, women’s pension age is being increased again. For some unlucky women, by up to two more years.
“By suddenly making them wait so much longer, they face a shortfall of more than £10,000 and they simply will not have time to make appropriate financial arrangements to offset those losses. (Video 4)
“The Government announced these plans unexpectedly. Its paper explaining this decision concedes that women will not have time to plan, but still asserts that the change is not disproportionate.
“Others have already made careful plans for their retirement, some are seriously ill.
“These women have often already retired to look after older or younger relatives and most are not earning enough currently to be able to save the thousands of pounds necessary to replace the lost state pension. The decision is clearly discriminatory.
“Women accept the need to equalise pension ages, but the timetable proposed is unfair. The outrage is clearly demonstrated in the countless letters that we have received from our members.
“Saga’s survey of more than 12,000 men and women over 50 reveals that over half of respondents believe the change is unfair and 74% said that even though the government needs to raise money, the change in women's pension age as proposed is not the right way to proceed.
“The government urges people to plan carefully for their retirement. Yet women who did exactly that have had the rug pulled from under them by the government itself. Saga is calling for the government to reconsider its plans.” (Video 5)
What the Government could do instead – favoured option:
Delay the increase in women's pension age until 2020. Between 2010 and 2020, women's pension age is already set to increase gradually from 60 to 65. By 2020, the pension age for men and women will be equalised at 65. Waiting until 2020 before starting to increase women's pension age still further will allow men’s and women's pension ages to rise in tandem to 66, perhaps by the end of 2020. This would allow more time to prepare, affect fewer people and not interfere with the existing timetable of pension age changes.
In order to protect the most vulnerable women (and men) the Government could also leave Pension Credit eligibility at the current state pension age timetable, rather than increasing the age at which pension credit begins in line with rising women's state pension ages. This would at least ensure that the poorest will not be left to rely on just unemployment benefit.
In addition, the Government could consider exemptions for seriously ill women (and men) and allow them to retain the currently planned pension ages until 2020.
It is also essential that the Government makes it clear to women exactly what is being proposed, as many still are unaware of the plans. Ros Altmann said: “The Government itself is still misleading women with its official website. (Video 6)
“Despite the announcement of these reforms the changes are still not accurately reflected on the Government's own retirement calculator which is on the Directgov website
“A small caveat under the calculator that signposts further information on the ‘proposed’ changes is simply not enough. The calculator should either be withdrawn or amended to reflect the new proposed dates – immediately.”
We’d like your signatures in support of those who will be adversely affected by the Government’s sudden proposed changes to women’s state pension age.
For more information please contact the Saga Press Office on 01303 771529.
At the very least, surely the Government must limit rises in women's pension age to ensure nobody suffers a rise of more than one year in pension age within ten years of their expected pension date
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