Re-think needed on women’s state pension age

State pension age for women needs rethink

Financial planning in association with Scottish Widows bannerSharon Thorpe, private client partner at Thomas Miller Investment, says changes to the women’s state pension age are unfair and alternatives need to be examined

“When the first State contributory pension was introduced in 1926 only 33 per cent of men and 40 per cent of women were expected to reach age 65. Today, a 65-year old man is expected to reach 86 and a 65-year old woman is expected to reach age 89,” she said.

“Add to this the swelling number of baby boomers (those born between 1946 and the early 1960s) who have entered, and are entering retirement, and it’s clear why we have a pensions funding crisis.

“This is exacerbated by proportionately far fewer workers earning money to deliver tax revenues used by the government to help fund this growing financial burden.

“It is not a new problem. Successive governments have all known about this ticking financial time bomb. Many of those impacted by the changes to state pension rules are not happy with the situation. However, the pension funding crisis is an economic reality and dealing with it now is unavoidable.

“We as a population have failed to grasp the problem that we have. From the 1940s until April 2010, the state pension age was 60 for women and 65 for men. An increase in the state pension age for women to 65, phased in between April 2010 and 2020, was included in the Pensions Act 1995.

“However, in 2011 the coalition government pushed through a speeding-up of the latter part of this timetable so that women’s state pension age will instead increase to 65 between April 2016 and November 2018.

“From April of this year, a woman who originally thought that their retirement age would have been 60, will now have a retirement age of 63. The need to raise state pension ages for both sexes is a proper response to a population that is growing older. However, it seems to be particularly iniquitous to do so, so relatively quickly to this cohort of woman.

“Firstly, the changes accelerated by the coalition government have not left time for these women to plan alternatives.

“Secondly, many have not been communicated to or been made aware of these changes effectively.

“Finally, women who have generally had to put up with more inequality than younger women, fewer life chances than younger women and more likely than not supported their husbands through bringing up families whilst working are being told that they must work for another three years before being eligible for their state pension.

“There is a valid argument that money has to be saved by the government. It is true that some of us will be worse off because of austerity, and as said above the need for us all to retire later to address the funding problem that we have.

“However, when something is so clearly unfair, we need to say so. The government needs to think again about how these savings might be achieved, possibly by raising the age for everyone by a little and over a longer time rather than by a lot to smaller and specific number, such as the women affected by these changes.”

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