Labour's state pension plans criticised by experts

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28 Sep, 2017

Labour's state pension plans criticised by experts

Critics have lambasted Labour’s proposed state pension changes, with some stating that the amendments would risk placing women into pensioner poverty.

Revealed earlier this week by Labour's shadow work and pensions secretary Debbie Abrahams, a Labour Government would work towards allowing women to collect their state pension by the age of 64 - a full two years earlier than current plans.

However, in order to achieve this, many experts say that women would be receiving far less for their pension, with their entitlement reduced by 6% for each early retirement year, up to a maximum of 12%.

The move has also been criticised by WASPI (Women Against Social Pension Inequality). Prior to the announcement, WASPI Director Jane Cowley said the group was “disappointed and concerned”, adding: “the proposal being put forward by the Labour Party only applies to some WASPI women and is no better than the actuarial reduced pension suggested some time ago and rejected by the WASPI campaign at the time.

Furthermore, if a Labour Government were to obtain power now, by the time their state pension changes could be put into place, most women born in the 1950’s would already be drawing from their state pension.

Former pension minister and Royal London director of policy, Steve Webb said: "Writing new primary legislation, getting it through Parliament, and implementing the change on the ground is likely to take at least two years.

"If this legislation completed its passage through Parliament during the 2018/19 session, it would take at least another year to change government computer systems and to communicate effectively to all those who might be affected.

"By the time the new law could be implemented, most of the women who had the shortest notice of state pension age changes would already be drawing a state pension".

Elsewhere, head of pension policy at Fidelity, Richard Parkin had a similar take on the situation.

"Labour’s suggestion of offering a reduced pension for women born in the 1950s may be too little too late for the Women Against by State Pension Inequality (WASPI) campaigners", he said. "Under equalities legislation it is unlikely that this new option could be made available only to women.

"In addition, there are serious practical problems with allowing people to opt for an early pension which is permanently paid at a lower level than the full state pension. For example, if the scheme is to be cost neutral, they would not be allowed to claim pension credit or other benefits to top up their low income".

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