State Pension Age Equalisation

Philippa Whitford Excerpts

Wednesday 2nd December 2015 Westminster Hall

[Barbara Keeley]

Indeed, and as I was just saying, the Chancellor made the comment:

“You’re just increasing the age at which that retirement entitlement kicks in”.

He went on to say:

“It was actually one of the less controversial things we have done”—

amazingly—

“and yet it has probably saved more money than anything else we have done.”

That relates to the point that the hon. Member for Kirkcaldy and Cowdenbeath made about “choice”.

[Dr Philippa Whitford (Central Ayrshire) (SNP)]

In view of the fact that in the autumn statement we heard the Chancellor crowing about all the money he had found down the back of the sofa, should we not just learn lessons for the future but demand that something is done for these women, particularly those who have been hit multiple times and who have had their retirement extended by six years?

[Barbara Keeley]

I agree with the hon. Lady.

As with the tax credit cuts that the Chancellor has just been forced to abandon, it is clear from a comment such as the one I have just quoted that he does not understand the impact of his policies on those affected by them. He does not understand what it really means to

“just increase the age at which that retirement entitlement kicks in”.

I have a constituent who is now forced to live off her savings after working and paying national insurance for 44 years, and another who is unemployed at the age of 61 and trying to live on £75 a week. Another constituent aged 61 has paid into national insurance for 44 years. She has been on sick leave, and when she moved on to half pay she was told that she had to start going to the jobcentre, where the staff treated her without dignity or respect. After 44 years, she still has to pay national insurance even though she is only on half pay. I have spoken to women who in their early 60s have been forced on to the Work programme. They find that demeaning after putting in a lifetime of work and contributions.

Other women have raised other important issues. Moving the pension age means missing out on pensioner benefits—even such things as a bus pass. That is difficult when an older partner has a bus pass and the 1950s-born woman does not and has to wait six years to get one. There is also no uniformity about concessionary bus travel, which is available at 60 in London, but not in other areas. The woman who told me that has to pay £7.50 to travel by bus to hospital. The women forced to wait until 65 or 66 for their state pension do not get free prescriptions either, and I have talked about the many health conditions which make that a key issue. Waiting up to six years for a state pension and other pensioner benefits will also hit carers who give up work to care. Carers UK tells me that women approaching pension age are much more likely to have caring responsibilities than men. One in four women aged 50 to 64 has caring responsibilities, compared with one in six men. A significant number of women with caring responsibilities decide or feel forced to retire early.

--- Later in debate ---

[Richard Graham (Gloucester) (Con)]

Thank you, Mr Davies. I was not expecting to be called quite so early. It is a pleasure to join this debate, and I congratulate the hon. Member for Worsley and Eccles South (Barbara Keeley) on securing it. The key issue today is communication. I do not think anyone is arguing about the general move towards the equalisation of pension ages. Indeed, most of the decisions were made in 1995, as the hon. Lady pointed out. The issue is about how the women affected were communicated to and when.

[Dr Philippa Whitford]

I take issue with the idea that the problem is just communication. While a big part of it was that women were not given notice, in actual fact, the goalposts have moved on more than one occasion for certain women. That is a big issue, too.

[Richard Graham]

The hon. Lady is right to say that women born after April 1953 had their state pension age increase accelerated under the previous Government. Paul Lewis referred to the three waves of women affected by the changes. Nothing changed for the first wave—the 1950 to 1953 group—but things changed for women born after April 1953. It is correct to say that the state pension age was accelerated for them.

Coming back to the point on communication, it is interesting that in recent evidence to the Work and Pensions Committee, the previous Pensions Minister said that it was unclear to him at exactly what stage people affected by the 1995 Act were written to. The Minister here today referred at DWP questions to a letter writing campaign from 2009 to 2010. Can he say more about that? For example, does his Department believe that that was the first stage at which women affected were written to, or was there an earlier campaign before 2009? That would be interesting to know. To some extent, the decision in December 2013 to give people affected by future pension changes,

“at least 10 years’ notice”,

shows that the DWP has taken on board the point the hon. Member for Worsley and Eccles South made on lessons learned.

--- Later in debate ---

[Neil Gray (Airdrie and Shotts) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Davies. Indeed, it is a pleasure to follow the excellent contribution of the hon. Member for Heywood and Middleton (Liz McInnes), in which she cited examples of her own constituents who are affected.

I am grateful for being able to take part in this debate, and I congratulate the hon. Member for Worsley and Eccles South (Barbara Keeley), whose contribution touched on much of what she rightly said in a previous Westminster Hall debate on women and low pay, in which I had the privilege of summing up for the Scottish National party. She also touched on some of the points made by my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) in a debate on guaranteed income for retirees led by my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford). She made a great speech and set out the issues well. My right hon. and hon. Friends in the SNP agree with equalisation, but we do not support the unfair manner in which the changes have been made, and we want to see action on that. A transitional period is required to protect retirement plans for women. I thank the WASPI campaign and constituents in Airdrie and Shotts who have contacted me about this issue by email and on social media.

There are now three categories of people who are affected by the two legislative changes: women born between 6 April 1950 and 5 April 1953 will, under the 1995 Act, have a pension age of between 60 and 63 by March next year; women born between 6 April 1953 and 5 December 1953 will, under the 2011 Act, have a pension age of between 63 and 65 by November 2018; and men and women born between 6 December 1953 and 5 April 1960 will have a pension age set by the 2011 Act of between 65 and 66 by October 2020. What a guddle.

The 2011 Act has affected around 5 million people in total—approximately 2.6 million women and 2.3 million men, who now have to wait longer to reach pension age. It is clear that women did not get a fair notice period and were not allowed enough time to prepare. Most of those affected by the 2011 Act have had only about five years to prepare. Pension planning should be lifelong and should not be made on the hoof as people approach retirement.

[Dr Philippa Whitford]

Will my hon. Friend give way?

[Neil Gray]

I am afraid I do not have time.

The lack of time to prepare is simply unfair. Age UK has said that the revised timetable for retirement allows

“insufficient time to prepare for retirement”,

as my hon. Friend the Member for Banff and Buchan (Dr Whiteford) also said during the passage of the 2011 Act. With all due respect, it is for that reason that I have to disagree with the hon. Member for Gloucester (Richard Graham). These women are being financially penalised and let down on what they were promised for retirement.

Another issue is that women will be worse off than men, yet again. According to the Pensions Policy Institute, only 65% of women in the 55 to 59-year-old range and only 34% of women in the 60 to 64-year-old range are currently economically active. That means that women are in a poorer position to compensate for the changes through work, and it will be more difficult for them to save and plan for their retirement. More women are excluded from the scope of auto-enrolment, as well, so women will lose out further. Based on Department for Work and Pensions analysis published in 2013 and 2014, we can estimate that setting the threshold at £10,000, rather than the 2014-15 earnings limit of £5,772, excludes about 1.6 million people from the scope of auto-enrolment.

I sincerely hope that the Government will revisit the inequalities currently experienced by women born in the 1950s. The Minister can take steps today by agreeing to the terms of the WASPI petition and bringing forward the review from 2017 as a matter of urgency.

--- Later in debate ---

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Davies. I warmly congratulate the hon. Member for Worsley and Eccles South (Barbara Keeley) on securing this debate. She spoke with passion and demonstrated the human and social impact of the changes that will affect women in her constituency and throughout the United Kingdom. I thank all the speakers who have contributed to this debate. There has been a lot of passion and appreciation of the challenges that women face as a consequence of these changes.

I say respectfully to my colleague on the all-party group on pensions, the hon. Member for Gloucester (Richard Graham), who is passionate about pensions and knows a lot about them, that we accept that there are issues of communication here, but this is about not communication, but fairness. The Government must recognise that the transitional arrangements are not right, and, on the back of this debate, they must reflect on that and make changes.

Members on both sides of the House agree that it is important that we deliver fairness in pension provision. To that end, there is no doubt that the significant historical gender issues with pension provision need to be tackled. Although we have made progress, there are still substantial shortfalls in pension provision for women, and the challenge of securing dignity in retirement is affected by women’s longer life expectancy.

[Dr Whitford]

We have talked about communication and the women who have had multiple hits, but this issue is also about the fact that, during their working lives, those women had such difficulty in accruing a strong pension pot in the first place. Women who worked part time, as my mother did—my father died when I was quite young—were not able to contribute to a significant pension at all. My mother worked for the civil service in Belfast and was made to stop when she got married and had children. Women who got divorced, as she eventually did from my stepfather, got no decent share of a pension pot at all. Those women have faced prejudice through their whole lives, and now we want to solve the problem of equalisation on one tiny cohort of women. That is an unfair burden.

[Ian Blackford]

I absolutely agree. We are talking about the state pension, but my hon. Friend is right. That is why I referred to the gender issues in pensions. We must address not just this issue, but some of the other challenges that we face, such as the fact that women who work part time do not participate in auto-enrolment. There are many things we have to look at to ensure that women have dignity in retirement. Much has to be done.

The SNP warned about state pension age equalisation in the last Parliament, and it is disappointing that our concerns were not taken on board. I should state that we agree with equalisation, but we do not support the unfair manner in which the changes were made. A longer transitional period is required to protect women. My hon. Friend the Member for Banff and Buchan (Dr Whiteford)stated in this chamber in May 2011:

“The issue is not only the pace of change. It is the context of a lifetime of low pay and inequality faced by many women, and the old-age problems that are a cumulative effect of that. The Government had an opportunity here to tackle women’s inequality in old age, but so far they have, instead, arbitrarily targeted women born in 1954.”—[Official Report, 11 May 2011; Vol. 527, c. 436WH.]

What created this injustice that many woman born in the 1950s are facing? Let us go over the facts. The Pensions Act 1995 provided for the state pension age for women to increase from 60 to 65 over the period April 2010 to 2020. The coalition Government legislated in the Pensions Act 2011 to accelerate the latter part of this timetable, so that women’s state pension age will now reach 65 in November 2018. The reason cited was the increase in life expectancy since the timetable was last revised. As mentioned by the hon. Member for Worsley and Eccles South, some people in the north of England, and indeed in Scotland, have a much lower life expectancy and will not receive the full benefits that the legislation mentions. It had initially been intended that the equalised state pension age would then rise to 66 by April 2020. However, due to concerns expressed about the impact on women born in March 1954, who would see their state pension age increase by as much as two years, it was decided that that should happen over a longer period, with the state pension age reaching 66 in October 2020. We must go further.

A shifting of the entitlement by six months was wholly inadequate. Indeed, I would say it was a mean-spirited move by a Government who have failed the test of fairness in treating the women caught up in the changes. With this Government, it is not about doing the right thing but about doing what they can get away with. No doubt the Minister will trot out the line that the money could not be found to create a longer transitional period, but it is all about priorities. When they can find £167 billion to spend on nuclear weapons, they can find the money to do the right thing and look after their pensioners. On this and so many other issues, the Government have a faulty moral compass.

Women affected by the 1995 and 2011 Acts fall into the following groups. Women born between 6 April 1950 and 5 April 1953 have a state pension age under the 1995 Act of between 60 and 63 and reach state pension age by March 2016. Women born between 6 April 1953 and 5 December 1953 have a state pension age under the 2011 Act of between 63 and 65 and reach state pension age by November 2018. Men and women born between 6 December 1953 and 5 April 1960 have a state pension age set by the 2011 Act of between 65 and 66 and reach state pension age by October 2020. The 2011 Act affects around 5 million people—2.6 million women and 2.3 million men—who will now have to wait longer to reach state pension age.

Women did not get a fair notice period. The periodic state pension age reviews established by the Pensions Act 2014 seek to give 10 years’ notice. In 2005, the Pensions Commission suggested that

“a policy of significant notice of any increase (e.g. at least 15 years) should be possible”.

Why was that not delivered? The 1995 Act gave 15 years’ notice, did not take effect until 2010 and did not affect anyone aged 44 or over at the time of the announcement. However, some of those whose state pension age was increased by the 2011 Act received only around five years’ notice. That is simply not good enough. Those with the largest increases—18 months—got less than eight years’ notice. Age UK argued that the revised timetable could leave many with

“insufficient time to prepare for retirement.”

The previous Pensions Minister, Steve Webb, said that he accepted that the period of notice being given to some women was “the key issue”. He also said in a debate in October 2013 that he recognised that not everyone affected by the 1995 Act had been aware of it:

“I accept that some women did not know about it, and not everybody heard about it at the time.”—[Official Report, 8 October 2013; Vol. 568, c. 54WH.]

Is it not an obligation of Government to ensure that people are aware and can take action? Will the Government accept responsibility for that?

In a submission to the Work and Pensions Committee on the impact of the Government’s pensions reforms on men, the Pensions Policy Institute said:

“The previous changes legislated in the Pensions Act 2007 gave men an effective 17 years notice from the year in which the changes were legislated to the year in which the SPA increase started (2024). The current proposals are giving men just over 7 years of notice (2018).”

What a muddle. What a way to treat people who need to plan ahead for their old age. Within five years of the current state pension age of 65, only 54% of the male workforce is still economically active. It would be desirable to give 10 years’ notice because around 76% of men are still economically active within 10 years of the current state pension age of 65 and could therefore respond to the policy change by delaying their retirement if they need to.

The Pensions Act 1995 gave women an effective 15 years’ notice of the year in which the state pension age increase started, but the current proposals have limited that to five. Only 65% of women aged 55 to 59 are economically active, compared with around 76% of men, and only 34% of women aged 60 to 64 are currently economically active, compared with 54% of men. Quite frankly, those women do not have the time to put in adequate provision to compensate for the changes. The evidence suggests that policy makers should ideally give women more than 10 years’ notice of any future state pension age changes to allow them sufficient time to adjust their retirement plans or to save more while still working. The National Centre for Social Research stated in 2011:

“In 2008, fewer than half (43%) of the women who, at that point, would not be eligible for their state pension until they were 65 were aware of the planned change.”

Women cannot simply have their retirement age increased by four or six years without even knowing about it. Ultimately, it will lead to hardship, shattering retirement plans with devastating consequences, including poverty and ill health.

The change throws up the question of the position of women with multiple low-paid jobs in relation to automatic enrolment. Women will disproportionally suffer further under new changes to the state pension under the single tier when they have multiple jobs. More women are excluded from the scope of auto-enrolment and will lose out further. Employers are required to auto-enrol workers who are not already in a workplace pension scheme, are aged between 22 and state pension age and earn more than a minimum threshold. The earnings trigger for auto-enrolment was initially set at £5,035, with contributions paid from the same level. However, it has since increased on a number of occasions and is now £10,000, with contributions paid from a lower level—the national insurance lower earnings limit, which was £5,824 in 2015-16. Based on Department for Work and Pensions analysis, we can estimate that the threshold of £10,000, rather than the 2014-15 lower earnings limit of £5,772, excludes some 1.67 million people from auto-enrolment, 77% of whom are women. The Government must revisit the inequalities felt by women born in the 1950s and they must do so immediately.