Saga says state pension age plans must change

Tuesday 17 May 2011

Saga says state pension age plans must change

  • Hundreds of women expected to lobby Parliament tomorrow

Saga has been inundated with letters and emails from women who are distraught and angry about the Coalition's proposed changes to their state pension age. Many people just don’t seem to understand why this is so unfair - many men do not realise that these women's lives have not given them a chance to build up private pensions and that they had already accepted an increase in their state pension age of 3, 4 or 5 years. Having accepted that, it is not right to impose a second rise on them without giving them sufficient time to prepare. We have a petition that is already supported by over 20,000 people.

Dr. Ros Altmann, Director-General of Saga says: ‘’Yes, pension age must rise, but not in this unfair, rushed way.’’ There will be a mass lobby of Parliament tomorrow, with thousands of women expected to come from all over the country as AgeUK is arranging a meeting for them to see their MPs. Saga calls on the Government to reconsider its timetable and has been lobbying Ministers and MPs to explain fairer alternatives.

Saga supports these women in quest for Government change of heart. Rising longevity does not require this sudden increase in pension age being imposed at short notice on one group of women who have already seen a sharp rise, which they have accepted and planned for. It does mean that we need to increase state pension age beyond age 66, much more quickly than planned and this is a better solution to dealing with rising life expectancy, which can give fairer notice.

Putting pensions on a sustainable long-term footing does not justify the sudden increase being imposed on one group of women at such short notice, especially when the Government knows that these particular women are more vulnerable than men and have little or no private pension wealth. Also, many are already out of the labour market and have made careful plans for their future, which are now in disarray. The pension system can be put on a long-term sustainable path by increasing state pension age more in future years, rather than having to rush.

For many of these women, unemployment benefit will not be an option and, in any case, this will not replace two years of lost pension. Out of work benefits will last only six months and are far less than state pension. Having a small private pension will exclude many of these women from benefits and many would not want to claim anyway. They feel this is an insult.

Summary of Unfairness:

Number of men facing increased state pension age of more than 1 year NONE

Number of women facing increased state pension age of over one year 500,000

Number of women facing increased state pension age of over 1½ year 300,000

No. of years of pension age increase for women between 2010-2020 6

No. of years of pension age increase for men between 2010 -2020 1

Number of years' notice of up to 2-year rise in pension age for women 6

Number of years' notice of up to 1-year rise in pension age for men 7

Proportion of these women who are single (no husband to rely on) 35-40%

Proportion of these women who are already out of the labour force 37%

Proportion of these women with no private pension 40%

Why these measures are unfair:

1. Women's pension age rising by more than men's - no man's pension age will rise by more than one year, but half a million women face rises of over a year, 300,000 will increase by over 18 months. From 2010 to 2020, women's pension age rises by 6 years, while men's increases by just one year.

2. Women being given less notice than men - women have 6 year's notice of up to two year's change, but men have seven year's notice of a one year rise.

3. These women are much more reliant on the state pension than men - 40% of them have no private pension at all so face having no income while suffering pension delay.

4. Many more women than men are already retired, or caring for others so cannot 'keep working' - 37% of these women are not working now, so what will they live on Also, these women earn less than men, so are less able to cope without a pension.

5. These women have less private pension than men, so more likely to be poor. They were banned from private pension schemes when they started work and have earned less throughout their careers, they did not have enough chance to build up private pensions. 35-40% of them are single, so cannot rely on a husband's pension either.

6. Women aged 56 and 57, are being forced to bear an unfair share of burden of long-term savings - the cost burdens are being disproportionately allocated.

7. Breaking Coalition Agreement which said women's pension age would not rise again before 2020.

8. Many of these women are ill, with shortened life expectancy and are distraught that despite making financial plans, they will not manage on their savings. They feel like the Government has gone into their bank account and taken out thousands of pounds!

Alternative proposals for MPs to consider:

1. Saga proposes an acceleration of the increase to 66½:

New proposal: This could actually generate more revenue than the current plans! We propose the Government could keep the timetable of state pension age increases as it is now until 2020, thus honouring the Coalition Agreement, but then accelerate the increase in state pension age to 66 by April 2021 and to 67 by April 2025. This still gives ten years' notice of a one year change in pension age and 14 years' notice of a two year change. State pension age could, for example, reach 66¼ by April 2022 and 66½ by April 2024 for both men and women. The savings in state pension payments from this accelerated timetable would be fairer, help state pension age reflect higher life expectancy, save money relative to current proposals and would better move us towards long-term sustainability than the current plans.

Other proposals have been made, which would all have a bigger cost implication:

2. Keep existing timetable till 2020, then accelerate rise to 66 by April 2021: Delaying the State Pension age increase until 2020 and then accelerating the rise to 66 by April 2021 would, according to DWP figures, result in an extra cost of around £7billion (Lords Hansard, 1st March 2011, col. GC123).

3. Limit pension age increases to no more than one year for everyone: Ensuring that no woman faces an extra pension rise of more than one year, thus alleviating the extreme unfairness of women facing up to a 2-year delay would, according to DWP figures, cost an extra £4billion (HL 7234, col. WA415, 9th March 2011).

4. Keep Pension Credit eligibility to the current women's pension age timetable: To protect the most vulnerable women (and men) from the impact of the pension age increases, Government could ensure Pension Credit remains available to people in line with the current women's pension age timetable. According to DWP figures, this would cost an extra £800million (HL 7233, col. WA 414, 9th March 2011).



How do these proposals break the Coalition Agreement?

The Coalition Agreement stated: ''The Parties agree to_hold a review to set the date at which the state pension age starts to rise to 66, although it will not be sooner than 2016 for men and 2020 for women.'' This seems absolutely clear. Women's pension age would not start rising to 66 before 2020. Yet just a few weeks after this Agreement the Government unexpectedly announced that actually women's state pension age would start rising from 2016 and by April 2020, the current plan is that both men and women's state pension ages will be 66.

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