The long-term nature of pensions doesn’t always sit easily with the short-term nature of politics. Those tasked with improving the system often barely get a chance to digest the issues before being shuffled into a new job. Certainly the last Labour government was criticised for its ‘revolving door’ reshuffles that saw annual changes to its pension team.
It was with a sense of déjà vu that I read that shadow pension minister Rachel Reeves had been shuffled into a new position with the Treasury. As a grand finale, she tabled an important amendment to a proposal in the Pensions Bill that could make life difficult for hundreds of thousands of women.
Historically women have reached state pension age at 60 and men at 65. The current system would have equalised this to 65 by 2020, before increasing the pension age for both men and women to 66 by 2026. The new Bill proposes to accelerate this so that state pension age is 65 for women by 2018, with a rise to 66 for both men and women by October 2020.
Around half a million women now aged between 56 and 57 will need to work more than a year longer than they had anticipated. About 300,000 will have to wait 18 months longer. A core of about 33,000 born in spring 1954 might have faced two extra years wait’ although a late compromise has cut this to 18 months by switching the April 2020 change back to October.
The issue here is not just the lost income but the lack of time these women are being given to make alternative arrangements to mitigate that loss. For some women this will be manageable but for those on lower incomes or state benefits it will be impossible to fill the gap.
Like most women, I do recognise that the government needs to balance the books and try to adapt to a real world in which government spending is under pressure and we are living longer lives. I would have no issue in telling clients to bite the bullet and make the best of the situation if I thought the government – and by that I mean past, present and future – managed their finances well. Instead I and many other women feel we are paying the price of successive politicians’ inability to ensure the money they do have is spent most effectively.
Everyone recognises this acceleration of the state pension age is very harsh on the women caught up in it. Leaving the current rules in place would have cost the government a relatively small sum but instead they have chosen to make the women affected pay.