Now state pension ages are equalised, let's fix the real problems


Today is a day for celebration. After nearly 60 years of inequality and discrimination - originally against women, and more recently against men - the state pension age is at last the same for men and women. For one day only, both men and women will retire at 65. Tomorrow, the state pension age for both men and women will start rising again in lockstep, reaching 66 by 2020 and then to 67 and 68.

I make no apology for celebrating the equalisation of pension ages. In my view this is long overdue. I have expected it all of my working life, having first discussed it when I was still at school. I never thought it was fair that my brother 14 months younger than me should receive his state pension 6 years and 4 months later than me. We both work for our livings and we have both brought up children. Life has dealt us different cards - I am significantly poorer than him - but that is not a reason for me to have a much earlier state pension purely by virtue of being female.

That said, the rise in state pension ages has caused distress and hardship to some women, and indeed to some men, as I shall explain. And the forthcoming rise to 66 is set to cause even more hardship. Something needs to be done.

I don't believe the solution is to restore the lost state pensions of women born in the 1950s, or give them any kind of "bridging pension". To do so would be to excuse them from the consequences of laws passed decades ago. It would also restore the discrimination against men that has been ended today. I would rather see a solution that preserves this hard-won equality between the sexes while relieving the hardship that state pension age rises create for some people.

In my view there are two groups of people who are disproportionately hurt by women’s state pension age rises.

1. Women born in 1953-4 whose state pension age was raised a second time at short notice in the 2011 Act.
The 2011 Act accelerated the timetable for the 2007 Act, under which state pension age for both men and women would rise to 66, by six years. This truncated the 10-year transition under the 1995 Act which was already in progress. As a result, women born in the second half of the 1995 transition group – those born April 1953 to April 1955 – had rises of up to 18 months in their state pension age at very short notice. That was 6 months more than men of their age. Admittedly, the state pension age for most of these women was below that of men, so it could be argued that a larger state pension age increase is not discriminatory. But it was undoubtedly unfair. Many of these women had prepared for the rise of up to 5 years in their state pension age under the 1995 Act. The additional wait imposed at short notice was unfair and distressing.

I originally thought the 2011 timetable should be relaxed so that the rise to 66 did not start until 2020 when the 1995 transition was planned to complete. But that ship has now sailed. The accelerated 1995 Act transition is complete. Women born in 1953 are receiving their state pensions. So I now think there should be compensation for this small group of women (about 500,000). At the very least, they should be compensated for the additional 6 months rise over and above the rise imposed on men of their age. This compensation should not be means tested.
2.  Women and men in their early 60s who are claiming benefits. 

This is a much larger group and one which is severely disadvantaged not only by the state pension age rises, but also - more significantly - by the mess that ten years of cuts, freezes and ill-considered (and often brutal) reforms have made of the working-age benefits system.

It is self-evident that a woman in her early 60s who is unable to work through illness or disability, or who is unable to find work, has suffered a significant loss. Instead of receiving a pension, she is obliged to justify her benefits claim, either by proving she is ill or disabled enough not to be able to work, or by proving that she cannot find work. The amount of money she receives is considerably less than her state pension would have been. It is even less than Pension Credit. Women find the process of applying for benefits stressful and demeaning, and many struggle to live on the pitiful income our society sees fit to give to those who, due to circumstances beyond their control, are unable to work. 

It is less widely known that a man in his early 60s who is unable to work through illness or disability, or who is unable to find work, has also suffered a significant loss. Prior to state pension age equalisation, men could claim Pension Credit at women’s state pension age. As women’s state pension age rose, men of the same age lost this right. They are now similarly obliged to navigate the harsh, complex and demeaning benefits system, and even if successful, live on an income far below what they would have received from Pension Credit.

There are two possible solutions to this problem. Pension Credit still exists, so one solution might be extend it to women and men born in the 1950s who have not yet reached state pension age. Labour has suggested something along these lines, as has the cross-party APPG, although so far both have failed to recognise the need to extend this to men as well as women. However, this solution would cause further problems:

-  it would encourage women to whom Pension Credit was extended to believe that they are pensioners rather than working age women, and therefore reinforce calls for reinstatement of their full state pension

-  it would be unfair to younger men and women who would be denied Pension Credit in their 60s.

In my view a much better solution would be radical reform of the working-age benefits system. The reforms I would propose are both general and specific to older people. This is my list. It is not exhaustive.

General reforms
  • If 1950s women can’t live on ESA/JSA/Universal Credit, neither can anyone. Benefits payments have been frozen since 2015. They need uprating.
  • Carer’s allowance needs to be raised to the minimum wage.
  • Work allowances were increased in the Budget, which was welcome, but marginal tax rates are still too high. Work allowances need to be progressively raised in the next few budgets to reduce marginal tax rates and restore work incentives.
  • The Work Capability Assessment should be carried out by people’s own GPs or practice nurses, not by poorly trained assessors who are financially rewarded for finding people fit for work
  • The sanctions regime should be softened and full right of appeal restored. Sanctioning people on ESA (or the Universal Credit equivalent) must stop completely.
Specific reforms for older people

  • The savings cap starts to bite at £6,000 and completes at £16,000. This is far too low for people close to retirement. People close to retirement do not have time to rebuild savings, and they will need those savings in later life. The savings cap should be lifted for people over 60.
  • The work capability assessment, jobsearch requirement and sanctions regime should be ended for people over 60. However, people over 60 should still have support to help them find work.
  • The Universal Credit rules about hours worked need to be relaxed for people over 60. Older people should not be expected to increase their hours to qualify for benefits. Many people need to reduce their working hours as they approach state pension age, and they should not be penalised for this.
     
  • Could consider an equivalent of Work Allowances for people who have unearned income, for example from a works pension, so that they can still receive benefits even though they have some income.
I am well aware that these are comprehensive reforms and would be expensive. But what kind of society are we, if we cannot support our most vulnerable people or enable people close to retirement to live with dignity?

Of course, an even better reform would be a universal basic income, supported by comprehensive universal services and funded by taxes on property and capital. But we are a long way from that, and we have an immediate problem that desperately needs addressing. We should never have shredded our welfare state like this.

Although I don't support the WASPI and Back to 60 campaigns, I am grateful to them for - along with others - highlighting how callous we have become. Frightened by the financial crisis, we have played out yet again the cycle of harshness into which Britain has been locked for centuries. We need to rediscover the spirit of generosity.

Related reading:

The road to the workhouse
Pensions and stuff

Comments

  1. None of this will help women struggling now. All my hard earned savings are gone.

    ReplyDelete
    Replies
    1. In fact the benefit reforms I suggest would help women struggling now.

      Delete
  2. So after a lifetime of work, and paying Tax and NI, I live in fear of being made redundant. Should that happen (I work in the Retail sector), I will be dependent on my Husband to support me. I can't see any employer wanting to take me on in my 60's! Equality? Really?

    ReplyDelete
  3. Hi Francis, thanks for another insightful post.

    Two further unfair points that doubtless will be address by HM Government as a matter of urgency are

    1. I was (unfortunately as it now transpires) in one of the "contracted out" pension schemes, this has the undesirable effect of those years not counting towards the UK State Pension. I then started to make additional voluntary contributions to make up the years in order to qualify for a full State pension. At the time my ex-wife's contributions also counted. I reached the target of 30 years, which was then sufficient and indeed confirmed in writing by the authorities.

    But the goal posts were shifted and I needed 35 years of contributions and further shifted so that my ex-wife's contributions no longer counted.

    I have restarted the voluntary contributions but will not be able to reach the full 35 years before I reach pension age.

    This should be addressed so that anybody who has not made 35 years of contributions should be able to make sufficient additional payments to gain the full pension.

    2. The old chestnut of pensioners living in countries such as Australia and Canada should have inflation increases applied.

    ReplyDelete
  4. Interesting proposals Frances. Unfortunately with regard to the 'work capability assessments' it is unlikely that GP practices can take on this role. GP practices are already overstretched and there is a shortage of GPs. This is one if the reasons why the current system has evolved.

    ReplyDelete
    Replies
    1. The current system didn't "evolve". Assessment was deliberately removed from GPs not because they were overstretched but because they were seen as more likely to be on the claimant's side. Assessors working for the DWP could be given targets for denying claims and financial rewards for finding people fit for work. The sole purpose of the assessments was to cut welfare costs by getting people off benefits.

      Delete
  5. Certainly a very interesting topic to address, considering that the state pension age of women and men has only been increasing, but this does not mean there is a concern focused on the health of a person who is over 60 years old and who may become more prone to suffer both accidents and diseases.

    Thanks for sharing!

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    ReplyDelete
  6. Unfortunately this is not just about one decade being robbed of their longstanding pension rights, 1960's have also been subjected to the same heinous increases with no warning or correspondence to the fact, and those from 1961 have seen theirs increase to 67+ years, which is also wholly unacceptable, we have had as much notice about these increases as those from 1959, merely a matter of months difference,so how on earth are you meant to prepare for a change so monumental such as this with no time nor notice ? That's even if you could afford to ? Short answer most can't, this has wreaked havoc financially for many, everything from insurance policies having to be redone,to those having to sell their homes, to try to stay afloat with jobs they can barely cope with, the whole acceleration of the pension age was absolute daylight robbery, especially as the cridland report suggested 10 years notice per change, I am truly disgusted at the way this government have treated 1950's and 1960's women, totally unacceptable.
    Yours truly angry 1960.

    ReplyDelete
    Replies
    1. I agree with you that it would be unacceptable for the Government to offer compensation and/or early pensions to 1950s women, but not to those born in the 1960s who have had the same or larger rises and no more notice. Indeed I have publicly said that if the Government did this, I would launch a legal challenge on the grounds of age discrimination under the Equalities Act 2010, since I am only a few days younger than the youngest 1950s women and have had exactly the same SPA rise as them with no more notice.


      However, I disagree with the rest of your comment. Equalisation at 65 was announced in the November 1993 Budget. As with all Budgets, it was broadcast live on TV and radio, was the top item of news on all TV and radio news and comment programmes, and was on the front pages of all newspapers including tabloids, with pages and pages of coverage inside. You would have to have lived under a rock to have missed it. I suspect that the reason why 1950s women say they "didn't know" was that their pension age was so far away that they weren't interested in Budget changes to pensions, so didn't take any notice. This is even more true for 1960s women, many of whom were only in their 20s at the time. I think the 15-year delayed start to equalisation was too long, because women who might have known about it in 1993 had forgotten about it by 2010.


      I do not agree that this has "wreaked financial havoc". It is not difficult to find out state pension entitlement, and if it matters so much to their retirement plans, then people really should make the effort. I also agree with the decision to equalise at 65 and then to raise the SPA to 66 and 67. My own SPA is now 66, and I assure you my life has not been wrecked by this.

      Delete
  7. Hey, thank you very much for the information! Is there a way I can get more info on the matter? So I can make a post on my local university about this? https://uautonoma.cl/ Thank you very much in advance!

    ReplyDelete

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