This article was published today at ProgressOnline.
Pensions reform may not be the sexiest of topics in Parliament, but you can be guaranteed that if we live to retirement age it is one area that will directly affect every one of us. Today, the Fabian Women's Network is holding a public debate on the Coalition's pension reforms and their impact on women. Speakers include pensions minister Steve Webb, shadow pensions minister Rachel Reeves, Baroness Patricia Hollis and Michelle Mitchell from Age UK.
The debate could not come at a more important time. Today the government is publishing proposals for a ‘universal state pension' which could make a positive difference to women and carers' pensions. But last week when the Pensions Bill went through report stage in the House of Lords, an amendment tabled by Lord McKenzie of Luton which aimed to stop the increase in the state pension age from 65 to 66 before 2020 was narrowly lost by 12 votes.
The pensions bill plans to raise the state pension age to 66 by 2020, and brings forward the timetable to equalise men and women's state pensions. Under the Pensions Act 2007, secured after Turner Commission and the establishment of a consensus on the principles of pension reform for a long lasting settlement, the increase was due to take effect between 2024 and 2026. The bill will bring forward the increase for both men and women so that by 2020, both men and women will be retiring at age 66.
This means that women's state pension age must rise from 60 to 65 by 2018 - just 7 years from now, rather than by 2020 as planned under Labour. The additional year's rise - to 66 - will be phased in between 2018 and 2020.
The coalition has said the changes are ‘necessary' because the current system is not sustainable in an ageing population. Certainly we are playing catch up on pension provision - projections show we will see a rapid increase in the dependency ratio over the next 30 years (i.e. number of economically active people supporting non-economically active). The Turner Commission summarised four choices that society and individuals need to choose from or balance for reform: a) pensioners will become poorer relative to the rest of society; b) taxes/national insurance towards pensions will need to increase; c) savings must rise; d) average retirement ages must rise.
None are palatable, and any change will see winners and losers. All parties were beginning to be warm towards the view in the Pension's Commission final report that supported the principle that the State pension age should rise over the long term as life expectancy increases - but do so as part of a package that is fair. The devil is likely to be in the detail - and today's Green Paper is seek views on plans for a mechanism to automatically increase the state pension age in line with average life expectancy.
Bringing forward the increase in SPA to 66 by 6 years is estimated to result in a total net saving of approximately £30.4bn between 2016/17 and 2025/26. The argument is that those reaching SPA before 2026 would gain from rise in life expectancy but would not carry a fair share of the costs.
But reaction to the Bill has rightly focused on the impact on women who have been disproportionately affected. It is estimated that half a million women will be waiting longer to receive their state pension under the new timetable, and for some women this will amount to losing £10,000 of pension payments. Shadow Pensions Minister Rachel Reeves said "Women born in 1954 have already had to adapt to one major revision as women's state pension age was increased from 60 to 65 between 2010 and 2020 and they now face another with little time to prepare." Ros Altmann, the DG of Saga, said the acceleration in timetabling was "clearly discriminatory" - "Women accept the need to equalize pension ages, but the timetable is unfair."
Age UK, who are supporting tonight's seminar have pledged to step up the campaign to halt the speeding up of the SPA increase to 66 before 2020 on the basis, according to Michelle Mitchell of Age UK, that "if given the green light these changes will deny millions of people the chance to plan properly for their retirement and will condemn the poorest to even more hardship".
With this being yet another reform that hits women the hardest, and at a time when unemployment is set to rise, implementing pensions reforms fairly is something that should concern us all and which needs far more consultation and cross-party consensus building than the Government has shown to date, and which characterized the process of reform over the last 5 years.
Seema Malhotra is director of the Fabian Women's Network