From Ros Altmann:economist and pensions,
    investment and retirement policy expert

  • pensionsandsavings.com

    Women’s state pension age rises – IFS research

    Women’s state pension age rises – IFS research

    2 August 2017

    • Controlling State Pension costs is right but 1 in 5 women affected pushed into poverty
    • IFS research shows rising State Pension age saves billions but leaves many in hardship
    • Working age benefits are not enough to support women unable to keep working
    • Government failure to properly inform women could justify helping some bridge the gap

    Government is right to look to control the costs of state pensions: Clearly, in an aging population, with rising longevity and pay-as-you-go pensions, younger generations need to be protected against excessive burdens of old-age support. Equalising men and women’s pension ages makes sense, especially as women tend to live longer than men.

    Failure to adequately warn women about rise from age 60: Ideally, though, any policy changes would be communicated well in advance and those affected would be given sufficient time to prepare for delays in starting pension receipt. Unfortunately, as the WASPI campaign highlights, the failure to communicate clearly and effectively is causing real problems for many of the women affected by the sharp pension age increases which started in 2010.

    IFS shows significant cost savings: Research released today show the scale of the impact of rising State Pension age on those older people affected and on the public finances. The rise in women’s State Pension age between 2010 and 2016 has saved over £5billion in public spending and has benefited the Government in three ways. Firstly, the money saved by not paying pensioner benefits. Secondly, higher tax and national insurance receipts as women have continued working while waiting for their State Pension. Thirdly, the additional work these older women are doing should have boosted the economy.

    But delayed pensions also caused increased poverty: Many of the women waiting longer for their state pension have been pushed into poverty. The IFS suggests one in five women aged 60-62 were in income poverty when their state pension age was increased to 63. It is clear from this new research that as long as women can keep working, they can mitigate the impact of delayed State Pension receipt, but those who cannot work either through illness, caring duties, unemployment or workplace age discrimination are left struggling.

    Men are also affected by this change: Up to 2010, older men who were unable to work and had little other income could claim pension credit but the starting age for receipt of means-tested Pension Credit is also tied to women’s state pension age. So, as women’s state pension age rose to 63, men also had to wait longer for extra help. The IFS suggests that many single men have also been forced into income poverty as a result of this delay.

    As State Pension age keeps rising, no allowance is made for those who cannot work:  There is a stark cliff-edge between the benefits available to people below state pension age and those above it. This is designed to encourage more people to keep working, however it makes no allowances for the problems of the significant minority of older people who genuinely cannot work. By 2020, the age for men and women will rise to 66 so the numbers in poverty will grow.

    The poverty is temporary, but there’s no help to bridge the gap: The IFS points out that this poverty is temporary and as soon as they reach the new higher State Pension starting age, people will be better off. However there is nothing in the system to help those who really need to bridge the gap. If they have no private pension or other savings (and many older women have been particularly disadvantaged throughout their lives by lower earnings and lack of pension rights) then they have no choice but to cut back their spending to minimal levels. The IFS suggests they are not facing ‘material deprivation’ but politically there is a large group of older people who feel they have been unfairly treated and were not given sufficient chance to prepare themselves. Those affected might have been able to cut their spending in earlier years if they had been aware of the coming increase in their pension age. By failing to properly inform them, the hardship caused has been exacerbated.

    Government could consider measures to ease the hardship of transition: There are no easy answers here, and it is important to control state spending, but I do hope Government might consider devising interim measures to help women – and men – in the transition period between their previous State Pension age and the new later date. Perhaps with early but reduced access to State Pensions, or payments that recognise poor health and other impediments to working longer, targeted on those in hardship due to the delayed pension age. It cannot be beyond the wit of policymakers to recognise the problems caused by the sharp rise in pension ages over a relatively short period of time and, in light of the cost savings, perhaps some help could be offered.

    9 thoughts on “Women’s state pension age rises – IFS research

    1. I am 63 today and won’t get my state pension until May 2020 despite working 44rs non stop! How can this be fair, living in poverty and without dignity of a pension i paid for. I am also an unpaid carer for past 20yrs saving government thousands of pounds, time for justice!

    2. I am the husband of a 1950s women who is set to loose £36000 of income through the pension changes.

      It is of course right that the pension age of men and women should be equalized but only after the Government has ensured equality in pay, the access to equality in occupational pension provision (reports suggest that men have average pension pots of £73600and women £24, 900) and also how the roles in society which 1950s women filled are going to be done in future (we now have a crisis in caring for our elderly).

      That is why what has happened is so unfair on these women.

    3. I was encouraged to take early retirement from government department job in the 2011 cost cutting exercise (also taking lower occupational pension as a result). Eight months later in 2012 I received a DWP letter telling me I had an extra 6 years to wait for my pension. No mention of this while I was still in post! You would have thought civil servants contemplating helping out with government cuts could have been told in a timely manner.

    4. I lost my job at 60 and because of stress claimed ESA. When assessed I was told I could work, from home, if necessary. I was on JSA for six months which was awful, plenty of interviews because CV didn’t show my age, but no job offers. All jobs I applied for were part time which I wanted, but all wanted me to commit to working any number of additional hours I was asked to do. Finally in desperation I took a job for 7.5 hours per week, which with very small occ.pen. gives me just over £90 per week – ie more than JSA. If I didn’t live with my daughter I could never afford to live alone and still have to wait for three years for pension, even though job only guaranteed for two years. The future frightens me!

    5. What about the women (and men) who are already saving the Government £000s in caring duties? Many of those affected by the age increase for SPA are already looking after elderly parents, some along with working, others giving up work to do so, now in their 80s, without any help at all. If these people ‘ignored’ the plight of their relatives then it would fall to the Government to cough up and pay for care!

    6. I was born 1954, will be 66 when I get my state pension. Stopped work to look after my father who recently died. I did get carers allowance but get nothing now. Another 3.5 years to wait

    7. Born June ’55. Husband died June 2016. He was disabled. I cared for him since 2012. Cared 3 years , 3 days a week for my mum prior to that. Raised 4 children. Worked as and when fitting work, (min wage), round other commitments and for filling the role society expected back then. Found out in 2012 that I did not retire at 60, but 66! My husband spent his final months worried about me..We knew that all the benefits we were getting..including pension credit, winter fuel payments as he was 2 1/2 years older than me, would stop and he knew I would have nothing and have to work and support myself for the next 5 years. Having upped the contributions needed to get a full pension without notice, and stopped being able to top up your contributions by using some of your spouses means that I now don’t qualify for the new full pension either. It really isn’t fair…

    8. I would willingly accept a lower SP if I did not have to work until I am 66. I have worked as Nurse,Midwife and Health Visitor for what seems like a hundred years, paid more than 40 years National Insurance and I am ‘tired’ of caring for others when it is not reciprocated by the Government

    9. Many of us who live alone ARE in material deprivation because of these changes. Some of us are only surviving through the generosity of friends and family but we shouldn’t be in this position. I am now 61 and have another five years to wait. I cannot expect to live on the goodwill of others for all that time and am fearful of what will happen to me when that money runs out.

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