A compromise on state pension reform for women?

22/09/11
News

Speaking at the Liberal Democrat party conference pensions minister Steve Webb defended plans for a £140 per week flat rate state pension and also indicated that he was willing to compromise so women were not unfairly affected by changes in the retirement age.

Changes in retirement age

The coalition have previously announced that the retirement age would be changed to 66 for both men and women from 2020, six years earlier than had previously been planned.

Many people thought this change was unfair with 330,000 women born between April 1953 and September 1960 most severely affected, having their retirement age put back by as much as two years.

Campaigners thought this change was too radical and would give women little or no time to plan for the delay in receiving their state pension.

It was also proposed that the retirement age would rise again to 67 as early as 2026.

However it now seems that the government may make concessions to help women affected by these changes, either by allowing them to claim pension credit or indeed reducing the delay in being able to claim the state pension to just one year.

Speaking at the conference Mr Webb said that increased life expectancy means the government cannot compromise on the rise in the state pension age, however he went on to say: “we also recognise that pension age changes need to be fair.”

“So although we stand by our plans to equalise men and women more quickly and to move to age 66 more quickly, I can assure you that we will do all that we can to ease that transition for the particular group of women most affected by the change.”

He continued: “We’ll make sure that the state pension they do get is calculated in a fairer way. At the moment, pensions are often bad news for women and I’m determined as the minister to change that.

“There’s a range of things that you can do, whether it’s about dates or about other bits of the system, that would ease the financial pressure for those most affected. I won’t pre-empt what we’ll say to Parliament in some weeks’ time but the crucial thing for us is fairness.”

Flat rate state pension

In the same speech Mr Webb defended government plans to introduce a flat rate state pension saying that it was fairer than the current system and would in fact cost no more.

Mr Webb said: “A retiring male can typically expect a pension of £160 at retirement. A female can expect £130 state pension. You might say it’s not fair but that is a fact of the state pension system now…We are not giving a boost to new pensions, we are taking the existing benefit and making it fairer.”

Seeking to give some clarity to the changes Mr Webb said that those people retiring close to retirement when the reforms are introduced will get the same state pension as they otherwise would have done. Those further away from retirement however can expect to see their entitlement change by the time they reach state pension age.

Mr Webb said: “You will still get your £160 a week if that what you are about to get now. In the future high earners will not be entitled to any more than £140. But on day one there will not be that many  [whose entitlement is lowered ] because we have to honour the past, so we have done little things to fix that, for example if you have only spent a few months in the country you don’t get anything.’