Women 'worse off after state pension age increase'


08 Aug, 2017

Women 'worse off after state pension age increase'

Making women wait longer to collect their state pensions has already boosted government finances by more than £5 billion a year, but the changes have left more than a million older women's households £1,664-a-year worse off.

The Institute for Fiscal Studies (IFS) report published last week examined the impact on women aged between 60 and 62 of the rise in the female state pension age between 2010 and March 2016 from 60 to 63, which affected women born after March 1950.

The age at which women can claim the state pension is due to rise to 65, in line with men, by November next year.

Thereafter, to keep up with rising life expectancy, the pension age for both men and women will rise to 66 by October 2020, then up to 67 by 2028 and 68 in the following decade, further boosting the Treasury from paying fewer pensions and collecting more employment taxes.

The IFS said the increase in women's pension age to 63 meant some 1.1 million fewer will receive the weekly payment.

This saves the UK taxpayer £4.2 billion in unpaid pensions and other benefits such as winter fuel allowance.

For women aged 60 to 62, employment rates have significantly increased, pushing up their pre-tax earnings by £2.5 billion in total and adding some £900 million to the national insurance contributions and other taxes paid into the Treasury.

Taken together, reduced pensions and benefits offset by higher earnings meant an average net loss of about £32 a week for the households of women in the age group, and around £50 a week in terms of individual women's incomes.

However, the increase in "income poverty" disappears once women reach retirement and get the pension and higher benefits available to older people.

The IFS also found little evidence of higher "material deprivation” - where people cannot afford things like house maintenance, replacement goods and spending money for themselves - suggesting they are coping with the reform by budgeting each month.

Meanwhile, an increase in the age when single men can claim Pension Credit, from 60 to 63, had reduced the benefits paid to male 60 and 62-year-olds by an average of £21 a week.

IFS deputy director and report co-author, Carl Emmerson, stressed women today could still expect long retirements even though they had to work longer.

He said: "Female state pension age today is almost 64, up from 60 in 2010”.

"However, increased longevity means that on average they can expect to receive the pension for 25 years which is as long as women reaching the state pension age at 60 in 1993,” he added.

"Even when the state pension age hits 66 in 2020, women reaching the state pension age then will receive their pension for 23 years on average, comparable to the length of time for those reaching the state pension age at 60 in 1987”.

Today's earlier news - German MP warns of possible £25bn UK trade deficit