Pensions

Baroness Donaghy Excerpts

Wednesday 13th December 2017 Lords Chamber

[Baroness Donaghy (Lab)]

My Lords, I am grateful to the noble Baroness, Lady Scott of Needham Market, for initiating this debate and for setting out so clearly why more than 3 million women have been treated so unfairly. Those of us who have been fighting for women’s equality for most of our lives support the equalisation of the state pension age and recognise that many women will benefit from the new flat-rate state pension. The subject of this debate is a group of women who have fallen into the gap between two safety nets: certainty about when they retire and relative certainty about their future income. I say “relative” because the old system counted a husband’s contributions as part of the woman’s pension and assumed no divorce.

I think John Cridland was right when he said in his Independent Review of the State Pension Age:

“People need at least ten years notice of change and change itself should be limited to once a decade”.


The women born in the 1950s did not receive this kind of notice. The decision taken in 1995 to set in train the equalisation was a fair decision but was not communicated in anything like an effective way. However, the real robbery took place in the 2011 legislation, which brought forward the year when the state pension age would increase to 66, from the planned date of 2026 to 2020. Even though after a huge outcry the Government slowed down their proposed timetable, it still meant that 2.6 million women were adversely affected.

It is not the equalisation of pensions that we are protesting about but the change in government policy which accelerated that change, combined with poor communication by successive Governments to the women affected. The acceleration meant that women did not have sufficient time to mitigate the potential losses, even if they were aware of the changes and in a position to do. One woman who estimated that she had lost £40,000 said that “no man has suffered this mismanagement of expectations”. Another asked: “Is it too much to ask that women like this are compensated for a contract that has been unilaterally broken with insufficient notice?”. The Institute for Fiscal Studies said that,

“household incomes for women in this age group have fallen by around £32 per week”.

For poorer households, the decline represented 21% of income.

I am sure that the Government will talk up the benefits of a flat-rate pension for those women who were not able to collect sufficient national insurance eligibility because of caring responsibilities and that the Minister will refer to the triple lock, the need to recognise demographic changes and the equality between the sexes. If she is very brave, she will talk about a lost generation applying for an apprenticeship. But we are not talking about any of these changes, nor do we wish to turn back the clock. We are talking about a different generation of women who did not have the same rights of flexible working and occupational pensions. In many cases, they did not accumulate sufficient independent wealth to maintain a decent standard of living on retirement.

These women had a raw deal on occupational pensions as well. When I started work, I was excluded from the occupational pension scheme because of a two-year eligibility requirement—and I was one of the lucky ones, because at least I was able to join eventually. Others were excluded because they were part-time and could not join until the law was changed in 2000. Others again were barred because they did not earn enough. All of us ended up with an occupational pension which was lower than we had the right to expect, and even now part-time workers are not automatically enrolled if they are deemed to earn too little. This continuing discrimination against the low-paid could be the subject of another debate.

It is difficult to appreciate today that married women who stayed at home to raise their families and care for their elderly were entirely dependent on their husbands’ state pensions. Until April 1977, the married woman’s stamp was offered to working women, most of whom did not appreciate the impact it would have on their state pension. The lower rate was encouraged by most employers and seized upon by low-paid women. When the lower-rate option was no longer offered, what is not always remembered is that the women who were already paying the reduced stamp were allowed to continue to do so. The age cohort we are talking about in this debate would then have been about 25 to 30, so were probably already working. It was a different world and they are paying the price for seeing one system swept away without benefiting from the new system.

In 1998, when I was a member of the Low Pay Commission, we discovered that women who earned too little to pay national insurance did not even appear on any statistics and could not be counted as a group who might benefit from a statutory national minimum wage. That was later rectified, but it was par for the course that low-paid women were undervalued and not regarded as a significant part of the labour force. This was not in 1850 or 1950 but in 1998.

Finally, the Women Against State Pension Inequality campaign is asking for a non-means-tested bridging pension to provide an income until state pension age and compensation for those women who have already reached state pension age. They are strongly supported by my former union, UNISON, which represents many of the women in this group. I urge the Minister to use her good offices to persuade the Government to change their policy on this.