Rachel Reeves: Don’t rob these women of the pensions they planned for

THE second reading of the Pensions Bill took place in the House of Lords yesterday. It will require 4.7 million people in their 50s to wait longer before they get their state pension.

In particular, the Bill includes changes that will deny 33,000 women in their mid-50s more than £10,000, and some 500,000 women of between £5,000 and £10,000, because of changes to accelerate increases to their state pension age. In Yorkshire, around 3,000 women are affected.

These proposals, to bring the equalisation of the state pension age forward by two years so that the state pension age for women reaches 65 by 2018 (previously 2020) and 66 by 2020 (previously 2026), are in the pipeline despite explicit commitment in the coalition agreement that while “the parties agree to... hold a review to set the date at which the state pension age starts to rise to 66... it will not be sooner than 2016 for men and 2020 for women”.

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The changes, according to the Government, reflect people living longer. But there is no new evidence since the coalition agreement and changes to the timetable are already in the pipeline. And let’s be clear, we are not saying “no change”. It is right that the state pension age for men and women should be equalised.

This principle was established in the 1995 Pensions Act, which set out the timetable for increasing women’s state pension age from 60 to 65 between 2010 and 2020. But these changes gave those affected at least 15 years to prepare.

It is also clear that the state pension age for both men and women needs to rise beyond 65 in order to pay for a more generous basic state pension, linked to earnings. Labour’s 2007 Pension Act, as well as pushing forward with the equalisation timetable, established this principle and set out a timetable for increasing the state pension age for both men and women (to 66 by 2026, 67 by 2036 and 68 by 2046).

This is a principle we continue to back to ensure people don’t just have longer retirements on lower incomes, because these changes leave women with very few options, de-railing best laid plans and adding to uncertainty and, indeed, poverty.

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In practical terms, these changes mean that the state pension age for half a million women born in 1953 and 1954 will increase by more than a year.

The majority of these women – 300,000 – born between December 1953 and October 1954 will face an increase of 18 months or more. And, in the most extreme case, 33,000 women born between March 6 and April 5, 1954, will have an increase of exactly two years, retiring two weeks before their 66th, rather than their 64th, birthday.

These women have planned for their retirement on the assumption that they will reach state pension age in March 2018. They are now being told that, with just seven years to prepare and plan, they now must work an extra two years before being able to draw a state pension.

Women are already at a significant disadvantage when it comes to their pension provision. Women receive £40 a week less than men on state pensions reflecting lower contributions. This generation of women has tended to earn far less during their working careers, were often prohibited from joining a private pension scheme when they started working (part-time workers were only allowed to join pension schemes relatively recently) and have had interrupted careers which gave them less chance to build up a pension outside the state pension system.

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The fact is, there is an alternative to these rushed and ill-thought-through changes. The key issue is timing, giving men and women a chance to plan for their retirement – not moving the goalposts just before the whistle will blow.

Our alternative would address the issue of increasing longevity, but in a fair and just way. No change before 2020, followed by an increase in the state pension age for men and women to 66 between 2020 and 2022 affecting 1.2 million fewer people than under the plans, and affecting men and women equally.

Yet it would still deliver £20bn of savings for the government. Under this plan, no single person would be put in the unacceptable position of having an increase in state pension age of more than a year, and everyone would be given at least nine years’ notice.

There is a chance to amend this legislation. As Shadow Pensions Minister, I will continue to urge the Government to rethink, and address increasing longevity in a fair and rational way that does not rob women aged 56 and 57 of the pensions they rely and count on.