State Pension Age (Women)

Wayne David Excerpts

Wednesday 11th May 2011 Westminster Hall

[Teresa Pearce (Erith and Thamesmead) (Lab)]

It is a privilege to have the debate under your chairmanship, Mr Weir. I asked for the debate because, like many other hon. Members, I have been contacted by many women in my constituency who will be badly affected by the Government’s plans to accelerate the timetable for equalising the state pension age. That has come as quite a shock to many of them. They thought that they were nearing the end of their time in the labour market and had been looking forward to and planning for their retirement.

The Pensions Bill is due to be introduced in the House of Commons shortly, so I am grateful to have the opportunity to talk about the proposal in advance of its being spoken about in the Commons. I hope that this debate will also help to raise awareness of the issue among hon. Members and possibly their wives, sisters and mothers, and among other women who will be affected by the change but have not yet realised that.

All the main political parties accept that overall life expectancy is increasing and that the state pension age for women should rise and be in line with the age for men. I do not oppose the equalisation of the state pension age, nor do many of the women for whom I am speaking. In fact, they have already accepted an extension of the date when they will receive their pension. The issue is how the Government are going about accelerating that. Like many others, I think that the Government’s accelerated timetable is unfair and will have wider implications for our pensions system and for society as a whole.

It is worth taking a few moments to set out some of the background to the debate. Under the current timetable, women’s state pension age was scheduled to rise to 65 to be equalised with that for men in 2020. It was then to rise to 66 for both men and women by 2027, to 67 by 2036 and to 68 by 2046. Under the Government’s new plans, the state pension age for women will follow that schedule only up to 2016, when it will rise to 63. It will then rapidly accelerate to 65 by 2018 and to 66 by 2020.

The overall impact of the change means that 2.6 million women and 2.3 million men will have to wait longer than expected to qualify for their state pension. However, there is a small cohort of women who will be hardest hit by the change simply because they were born at the wrong time. I have to declare an interest as one of the 500,000 British women born between 6 October 1953 and 5 March 1955. They will have to work for another one to two years before they reach the state pension age. The women who will have to wait two years stand to lose £10,000 in pension income and up to £15,000 if they would be in receipt of pension credit. Under the Government’s plans, we will have a deeply unfair situation in which, for example, a woman born on or before 5 April 1953 will reach the state pension age at 62, but those born on 6 April 1953 will retire at 65. Many of the women who have written to me consider that age discrimination, and they have a point.

It is important to note that the proposal was unexpected—it has been sprung on these women. It was in neither the Conservative nor the Liberal Democrat general election pledges and it was not in the coalition agreement. The women who will be affected by the Government’s U-turn will not have enough time to plan for the further change in their circumstances.

[Mr Wayne David (Caerphilly) (Lab)]

Like many other hon. Members, I have constituents who are affected by this issue. For example, my constituent Mrs Janet Davies of Tydfil road, Bedwas, has been to see me and expressed very clearly the predicament that she faces. She was born in February 1954 and, as my hon. Friend said, stands to lose £10,000. What advice would she give Mrs Davies? How should she respond to the situation?

[Teresa Pearce]

I thank my hon. Friend for his intervention. I totally agree. The unexpectedness of the extension of the time is the problem. I really do not have an answer as to how my hon. Friend’s constituent will manage that. I will put some questions to the Minister later.

The accelerated timetable will start in 2016, so the proposal will affect women who would have previously reached the state pension age in about five years’ time. The worst affected will have to wait a further two years to reach their pension age, so they are seven years away from their pension date, which is well below the 15 years’ preparation time recommended by the Turner commission.

It is important to remember that women are already at a significant disadvantage relative to men when it comes to pensions. The median pension saving of a 56-year-old woman is just £9,100, almost six times lower than that of a man, which stands at £52,800. Women’s pensions are traditionally lower because many have taken time out of paid work to raise children or to care for parents.