State Pension Age (Women)

Yvonne Fovargue Excerpts

Wednesday 11th May 2011 Westminster Hall

[Rachel Reeves (Leeds West) (Lab)]

I congratulate my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) on securing this debate on such an important and unjust matter and on her early-day motion 1402, which has secured 138 signatures from across all the main parties.

I also congratulate Age UK on the campaign that it has been running. Those of us who get the tube to work in the morning and come up the escalators and into Portcullis house will have seen the posters that adorn the walls. They tell the stories of some of the women who will be affected by these changes. Some of those stories have been related by hon. Members from all parties this morning.

My hon. Friend spoke about some of the organisations that have provided support on this matter, such as Age UK, which I have already mentioned, and Saga. There have also been supportive articles in the Daily Mail and The Guardian. There is a broad coalition against the proposal, and we hope that the Government will take on board some of criticisms of the Pensions Bill, especially of clause 1 and the increase in the state pension age.

People who are approaching retirement say, “This is a bit like a horizon. You can always see it in the distance, but you can never quite get to it.” As my hon. Friends the Members for Sunderland Central (Julie Elliott) and for Blaenau Gwent (Nick Smith) have said, the goalposts just keep moving, and that does not seem fair, especially when people are trying to make the right decisions. They plan, contribute, bring up families and care for relatives, yet they are being penalised.

[Yvonne Fovargue (Makerfield) (Lab)]

Does my hon. Friend agree with my constituent who said that she felt discriminated against when she started work 30 years ago because she was barred from joining a personal pension scheme? She feels discriminated against now because of her date of birth and the fact that her pension will be delayed.

[Rachel Reeves]

I could not agree more. That is a big issue and one that I will address later. For a number of reasons, this group of women are particularly ill-equipped to deal with the changes that the Government are trying to force upon them.

I want to pick up on a couple of points raised by the hon. Members for Argyll and Bute (Mr Reid) and for Mid Dorset and North Poole (Annette Brooke). The proposals go against the coalition agreement, which states:

“The parties agree to…hold a review to set the date at which the state pension age starts to rise to 66, although it will not be sooner than 2016 for men and 2020 for women.”

These changes bring forward the equalisation of the state pension age to 2018, which is not mentioned in the coalition agreement, and they raise the state pension age for women to 66 in 2018—two years earlier than promised in the agreement.

Although there is increasing pressure on the Liberal Democrats to stick with the coalition agreement, there is no obligation on the Minister to support this breach or for coalition MPs to vote for it. No one in the country voted for this at the general election a year ago, and it is not what coalition MPs signed up to when they made their promises in the rose garden. We have heard a great deal from Liberal Democrat Members today. I hope that that means that people who are approaching retirement can feel that their MPs will not support these proposals.

To reiterate points that have already been made, 2.6 million women and 2.3 million men will have to wait longer for their state pension than they previously had been told. Some 500,000 women will have a delay of a year before they get their pensions and about 300,000 women will have a delay of 18 months or more. Unfortunately, 33,000 women who were born between early March and early April 1954 will have to wait another two years before they receive their state pension. I have been lobbied by a huge number of women on these issues, not least by my own mother who was born on 30 March 1954. She very much hopes that the Minister will be listening to every word that I say today.

There is fewer than five years’ notice before these changes take effect. The Turner report says that people should be given at least 15 years’ notice, and the Pensions Policy Institute believes that these changes do not give enough notice. Women need longer to prepare for changes in the state pension age because they tend to become part-time workers sooner than men of the same age.

As of April 2011, the basic state pension is worth £102.15 a week. Pension credit is worth £137.35 a week. Those women who are seeing a delay in their state pension age of two years face a loss of pension income of more than £10,000. For those in receipt of pension credit, that loss is closer to £15,000. That does not take into account the passported benefits that come along with a pension.

Longevity is increasing and Members from all parts of the House welcome that, but we cannot move the goalposts every time an actuary changes his forecast. Six months before the election, the Minister himself said:

“Pension policy needs to be stable and predictable years ahead, not made up on the back of a cigarette packet.”

I agree with the Minister. Although his words are still on his website, he is now making policy up on the back of that cigarette packet and it is hitting women particularly hard. Indeed, the recently published Green Paper on the flat rate pension consults on reasoned mechanisms for increasing the state pension age, which is a recognition of the unfairness that is being imposed on women by the Pensions Bill, which is just about to come to the House. That Green Paper does not include consultation on arbitrary changes with five years’ notice. The reason that it does not consult on those types of changes is because the Minister, his Department and the Government know that they are unfair. So why is he forcing them upon women who are 56 or 57 years old?

My hon. Friend the Member for Sunderland Central talked about the savings of women who are 56 or 57. There is something particularly perverse about targeting that specific group, because those women who are 56 or 57 now have average pension savings of £9,100, compared to the average pension savings of men of the same age of £52,800. At retirement, pension savings of £9,100 work out at £564 a year or £11 a week. The reasons for the difference in the average pension savings of men and women are varied, but the key point is that these women I am talking about are not in a financial position to absorb the changes being proposed at such short notice.

These women have earned far less during their lives than men of the same age. In 1980, the gender pay gap was 28.5%. When these women were in their 20s, they were earning on average almost 30% less than men of the same age. The gender pay gap has been closing since 1980 and it is now about 16%, but the point is that these women have suffered inequality throughout their working lives. They now face a double whammy and are paying the price for getting us there too quickly.

In addition, a lot of these women have worked part-time at some point in their life, particularly when they were bringing up children. In fact, many of them are also working part-time now, to help to care for elderly parents or grandchildren. As other Members have said already, these women are the big society. They are doing the caring work that we value as much as their work in the workplace. Of course, many of them have also had interrupted careers and have not paid full national insurance contributions. The Minister’s own Department estimates that women are entitled to receive £30 less in their basic state pension than men. All those points show that these women are more reliant on the state pension than their male equivalents, first because they have much lower private occupational pension savings and secondly because they are in not such a good position as men to increase their savings in the next five years.