Women in their mid-50s will have to work longer than previously expected, as the government brings forward the increase in their state pension age to 65 from 2020 to 2018.
New pensions timetable causes controversy
As a result of plans to phase in a state pension age of 65 for women in 2018, rather than 2020, those born between 6 December 1953 and 5 October 1954 will see it rise by more than 18 months.The measure will affect about 330,000 women.
Around 33,000 women, born between 6 March and 5 April 1954, will see an increase of two years.
Criticism of increases to women's state pension age
Although an increase in their state pension age was widely seen as inevitable due to women's rising life expectancies, bringing the deadline forward has taken some women by surprise. The government's initiative has been criticised by Dr Ros Altmann of Saga.
Who said:
"These women are being asked to shoulder an unfair burden and have insufficient time to make alternative plans to replace the state pension they will lose."
Age UK has also attacked the proposal as 'unfair'. So far, the government is sticking to its new schedule, although there have been suggestions that 'transitional arrangements' could brought in made to lessen the impact of the changes on some women.
Women's pensions are lower
Earlier this year a large-scale study by Prudential found that women tended to receive lower pensions than men, with a men expecting to get £19,600 on average while women anticipated a retirement income of £12,200.
Reasons for the pensions gender gap include lower wages and less consistent working lives. Some women's National Insurance Contributions are insufficient to generate the full state pension, while those who pay into private schemes for less time also build a smaller pension pot.
A final factor is annuity rates - which are lower for women than men, because they tend to live longer.
Which? pensions expert, Ian Robinson, said:
"Although there is little women can do to influence general gender inequality, the gap does show the importance of pension planning.
"It helps to get a state pension forecast and see what you might expect to receive. If there are contribution gaps, you might be able to buy 'extra years' so that you get full state pension.
"Similarly, women sometimes can make additional contributions to their workplace scheme, through AVCs, significantly boosting their resulting retirement income."
IFS observation:
How could the government perform a gender impact assessment of tax and benefit changes?
The Equalities Act 2010 places an obligation on the government to give 'due consideration' to the effects of its policies on gender inequalities.
The IFS was asked by the Fawcett society to consider ways in which our tax and benefit microsimulation model, TAXBEN (which we use for our distributional analysis of tax and benefit changes after each Budget) could be used as part of an assessment of the separate impact of Budget measures on men and women.
We have today published some simple analysis that does this.
