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Is this the solution to women’s State Pension woes?

Thousands of women have been hit by the rising state pension age. But MPs think they might have the answer

MPs have slammed the way the government has handled the rise in the women’s State Pension Age and have set out options they think could help reduce the impact. 

Could early access to the State Pension help thousands of women hit by the rising retirement age?A report by MPs on the Work and Pensions Select Committee – a cross-party group that examines government policies – said the government did “too little, too late” to warn thousands of women born in the early 1950s who have seen their State Pension Age rise by up to six years. 

The report says: “Previous governments could have done a lot better in communicating the changes. While the last and current governments have done more to communicate State Pension Age changes than their predecessors, this has been too little too late for many women. Many thousands of women justifiably feel aggrieved.” 

The Select Committee has put forward a series of suggestions that could provide at least a partial solution. 

The Select Committee suggests the government could:

  • Delay the increase in the State Pension Age or slow it down 
  • Allow affected women to have access to Pension Credit earlier
  • Put in transitional pension benefits 
  • Allow affected women to take their State Pension early, but at a lower rate 

It said the last idea – early access to a reduced State Pension – was “an interesting option and one the government should explore”. 

How might early access to the State Pension work? 

The Select Committee suggested early access to the State Pension should be ‘actuarially neutral’ – that is, someone retiring early would get the same amount over time as if they had retired at their normal State Pension Age. It gave examples of how it could work: 

In one example, a woman reaching State Pension Age on 6 January 2021 (aged 66), could choose to take her State Pension nine months earlier, on 6 April 2020. If she was eligible for the full New State Pension of £155.65, she would get £149.58 per week – a reduction of £6.07. 
  
Committee member John Glen MP said: "Lack of adequate notification of State Pension Age changes demands transitional arrangements, but implemented in an affordable way. This report recommends a possible way forward which the government should now explore."

Why is it such a big issue? 

The rise in the State Pension Age for women, which will reach 65 – the same age as men – by November 2018 and 66 by 2020 has been condemned by pressure group Women Against State Pension Inequality (WASPI). 

WASPI is leading a high-profile online campaign to get ‘fair transitional arrangements’ for affected women and has attracted over 170,000 supporters, which led to a parliamentary debate in early February. 

Anne Keen, from WASPI, says: “We are delighted in the interest that our campaign has received since its launch, highlighting the injustice served upon the women affected by the changes and the subsequent increase to the signatures to our petition. 

“We are looking forward to meeting with the cross party group to discuss ways forward in relation to the government making fair, non-means-tested transitional arrangements  for all of the women affected.”

The change to women’s State Pension Age has proved to be controversial, as a poll of retiresavvy readers has found. 

One in four (25%) respondents believe that the State Pension Age should be the same for men and women, and two fifths (45%) do actually agree with the government’s change, stating it’s fair. 

More than a fifth (21%) agree that appropriate steps should be in place to make it a gentler transition for the women who were given short notice, while one in 10 (9%), still believe men and women should have different retirement ages.  

What happens next? 

The Select Committee says it intends to investigate the idea further in the coming weeks, and it is important to point out that this is not government policy – just a suggestion from MPs. But it does provide a clear vision of what the government could do to help affected women. 

Despite WASPI’s great success in raising the profile of the issue and forcing it on to the political agenda, they’ve not been able to point to what the ‘fair transitional arrangements’ they’re asking for could look like – now they can. 

There are lots of details still to iron out. For example, the Select Committee says early access should only be for “a specified age and for a defined [group] of women”, so it’s unclear who could be eligible and what cut-off point there could be. 

The Select Committee also says it could be unfair to men who will also see their State Pension Age rise from 65 to 66 – and in that case, would they also be offered some form of early access? 

Perhaps most importantly for the government, there are big questions over what it might cost. With the government committed to cutting spending, anything that involves extra costs in the short term will be scrutinised carefully.  

Are you affected by the change in the women’s state pension age? What do you think of these plans? Let us know below or have your say in the Forum

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This article has been commissioned by retiresavvy and any opinions voiced are the author's own.

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