Parliament takes hard line on women’s state pension age increases

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Parliament takes hard line on women’s state pension age increases

Houses of ParliamentOn Monday afternoon (1 February), a debate on the state pension age changes and transitional arrangements for women born in the 1950s took place in an unusually packed Westminster Hall committee room.

Women who were born in the 1950s have faced repeated increases to their state pension age.

These increases were poorly communicated by government, leaving the affected women with insufficient time to prepare for retirement. These issues have been brought to light by the Waspi (Women Against State Pension Inequality) campaign.

Women Against State Pension InequalityWaspi demands that government “must make fair transitional arrangements for all women born on or after 6 April 1951 who have unfairly borne the burden of the increase to the state pension age. Hundreds of thousands of women have had significant changes imposed on them with a lack of appropriate notification.”

Age UK has also expressed concern that the changes cause hardship for certain groups of women: those who depend more on their state pension in retirement, and those who are more likely to suffer from health problems or disability, limiting their ability to work up to or beyond 65.

Monday’s debate took place following an online petition by Waspi, which garnered over 140,000 signatures. Petitions need over 100,000 signatures to be debated in parliament.

Helen Jones MP for Warrington North‘If this was a private pension,’ said Labour MP Helen Jones, “then this would be mis-selling.” She argued that the social contract between the state and women who have worked all their lives and expected to retire at a certain age has been broken.

“It’s not correct to blame this on the EU,” she said. Other EU countries have long transitional phases. In Austria, women’s statuary retirement age will be gradually adjusted to that of men by 2033. In France, retirement age will increase to only 61 from 2020.

Labour MP Andrew Gwynne pointed out that women in their 60s still earn 14 per cent less than their male counterparts. In addition, many women were not allowed to join their companies’ pension schemes at the beginning of their careers. Further, they have fewer years of National Insurance contributions, because they have taken time out to have children and care for their parents.

Conservative MP Richard Graham agreed that state pension age changes were not communicated properly. But he argued that the new one-tier state pension will bring improvement. He objected that providing the transitional arrangements for women as demanded by WASPI would cost £30 billion, which was more than the transportation budget or the budget for Scotland.

So long as longevity projections keep rising, state pensions are likely to increase too, he said.

He emphasised three points in relation to state pensions. First, he said that there should be a review of state pension age every five years, the next one being in 2017. Second, everyone should get 10 years’ notice if state pension ages change. Third, he addressed the inter-generational question and argued that a person should spend no longer than one third of his or her life on state pension.

Baroness Ros AltmannSimilarly, pensions minister Baroness Ros Altmann has previously said that there is no “magic pot of money” to provide transitional arrangements for women affected by the changes.

Hargreaves LansdownCommenting on the debate, Tom McPhail, head of retirement policy at Hargreaves Lansdown, says: “The government appears determined to stick to its guns, arguing that the policy of raising state pension ages is the right one, that it took reasonable steps to communicate with those affected, the issue was adequately debated at the time and there is no money available for any kind of transitional arrangement.

“The cost of any government concession could very quickly run into billions so it is hard to see how the government could give any ground without some offsetting measure elsewhere, such as raising further the retirement age for subsequent generations.”

The previous debate on this issue took place on 7 January in the House of Commons. Then, too, the government showed little interest in making any amends.

Sarah Pennells, founder of finance website for women Savvy Woman, says: “The government does women born in the 1950s a great disservice by not taking their concerns – and indeed anger – seriously. It may be true that women and men are living longer, but government figures show that the difference between those who are living the longest and those who are not is widening.”

She points out that the government sees the 1995 and 2011 Acts, raising the state pension age to 65 for women and to 66 for women and men respectively, as part of wider reforms. However, she adds: “if you’ve not been given enough warning of the changes, especially if – as many women do – you rely on the state pension as your only or main source of income in retirement, it’s irrelevant.

“The rises in state pension age have consistently been the biggest issue for women I talk to. When these women started their working lives, often at 16 or 17, the workplace was very different from how it is today.”

Read the original story on the MoneyWise website.

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