Article by Sarah Pennells
Ceri Wheeldon of Fabafterfifty.com asked Sarah Pennells of Savvywoman.co.uk about the proposed raising of the State Pension Age, and in particular the impact this will have on women and their pensions.
What has already happened in respect to legislation so far?
The government published the Pensions Bill in January which confirmed its plans to bring forward the raising of the state pension age to 66 by 2020. Since then it’s had its second reading in the House of Lords. Last month an amendment to delay the timetable was narrowly defeated and it’s due to go back to the Lords on Tuesday 27th April.
What is the situation today?
Currently men receive their state pension at 65 and women get their pension at around 61 years old. Under this timetable, the increase for women from 60 to 65 was due to be phased in over a ten year period so by April 2020 all women would receive their state pension at 65.
The previous government planned that the state pension age would rise to 66 for both men and women by 2026, to 67 by 2036 and to 68 by 2046.
Has the legislation been passed yet?
No, the legislation hasn’t been passed. Before the government’s plans to increase the state pension age to 66 become law it would have to be passed by the House of Commons and the key debate won’t take place there until May 18th.
How will women be affected by this?
Put simply, some women in their 50s will have to wait for up to two years longer to get their state pension. And that delay comes on top of the raising of the state pension age to 65 that’s already underway.
Around half a million women will have to wait for a year or longer for their state pension under the government’s plans to raise the state pension age to 66.
This isn’t about equality; it’s about giving women enough time to prepare for a change that will see some of them lose £10,000 of pension benefits. The current plans will unfairly penalise hundreds of thousands of women in their fifties.
Who will be most affected?
Women who were born between March 6th and April 5th 1954 are the worst affected. They will have to wait for an extra two years for their state pension (on top of the delay caused by the raising of the state pension age to 65). This means they will lose approximately £5,000 in state pension payments for every year that their pension is delayed for and will have to pay extra tax and National Insurance if they continue working until they reach state pension age.
They will only be entitled to out of work benefits, such as jobseeker’s allowance, in limited circumstances.
Why are women most badly affected by these state pension changes?
Women are affected worse than men because the most a man will find his pension delayed by under the plans is one year, whereas 300,000 women will have to wait an extra eighteen months.
The key when it comes to retirement planning is knowing what you’ll have when you stop working and many women have only just realised that they will not now receive their state pension at 60. Now – if the government’s plans are passed – half a million of them will have a second delay in their state pension to cope with.
How much will women lose financially as a result of the changes?
Assuming you’re entitled to the full basic state pension of around £100 a week it works out at roughly £5,000 a year for every year that your state pension is delayed by. If you also are in line to receive the state second pension (which used to be called SERPS), you could miss out on far more.
Is there anything that can still be done to stop the proposed changes going through?/ How can women make their views heard?
Protest, protest, protest! Email your MP If you know someone else who will be affected, make sure you tell them.
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N.B. please read, and protest.