My penny’s worth and a Quids-worth from Ros Altmann on #WASPI

Ros

  • 1950s women disappointed as High Court says Government did not discriminate against them.  
  • Equalising pension AGE does not mean pension equality – women still get much lower pensions than men.
  •  Many women have been pushed into poverty and did not know about the changes.
  • Government should help those in hardship – perhaps allowing early access to State Pension or Pension Credit for those hardest hit. 

Some observations from an ageing male

These bullets begin Ros Altmann’s blog on the Judge’s ruling against WASPI’s appeal against changes in the state pension age for women.

I agree with these bullets, women do expect the pensions that men get but many will share in their husband’s or former husband’s retirement wealth – whether pension or capital.

I should add that women now have a better though not a perfect claim on their husband’s pension – the not perfect bit’s that women of my age don’t typically pick up the state pension they should do – as a result of paying the reduced rate of national insurance for the family (not their) sake.

Most women will still have a longer claim on the state pension than men – a function of them living longer and the equalisation of genders for annuities have resulted in an underwriting distortion in favour of women. So let’s not get overly excited about the institutional discrimination against women in these things.

What we really need to do is to address the gender pay gap, which is at the root of pensions inequality. It means that many women get lower pension contributions into DC workplace schemes, lower accrual for DB plans and it also means many women falling into the net-pay woman-trap where they don’t pick up pension savings incentives as they fall into the nil rate income tax band.

Occasionally I find myself trying to read the arguments of WASPI women , to find they’ve blocked me. I find this sad as I am a “trying man” as Joe Strummer sang – trying in both senses of the word but well-meaning for all that.

I’ll conclude by pointing out that I live with a women who earns three times as much as me – which suggests that either I’m not paying myself enough – or I’m doing my bit to address this gender pay gap.


Here’s the substance of Ros’ article

In a landmark ruling , the High Court has dismissed the claim brought on behalf of 3.6million women whose state pension age has been increased sharply, often without their knowledge. The judges ruled that the Government was correcting a past inequality against men, rather than discriminating against women, and was entitled to change pension ages at short notice and without due warnings.

This may not be discrimination, but it has caused real hardship: It was always going to be difficult to prove that a policy intended to equalise men and women’s pension age was discriminatory. But many of those affected are suffering real hardship because successive Governments failed to properly inform women of the original 1995 Act changes, so they were expecting their State Pension at age 60 and had inadequate chances to prepare. That is perhaps more like maladministration than discrimination.

Equalising pension age, does not deliver equal pensions: They may start their State Pension at the same age, but this is far from pension equality as women generally have much worse pensions than men. Not only do older women have lower State Pensions, those in their early 60s are estimated to have just one third of the private pension wealth of men too.

Women lose out in pensions due to social norms and past disadvantage: Social norms caused women to lose out in pensions throughout their lives. When they were younger, they were often excluded from occupational schemes, were paid less than men and had to take time out for childcare. That meant their lifetime incomes are lower than men’s and the increase in divorce rates also means women have lost the husband’s pension they might previously have relied on.

State pensions are a state benefit, not a property right: The High Court concluded that Government can change State Pension rules, with Parliamentary approval, just as it can change other National Insurance benefits. Adjustments to social policy and controlling benefit expenditure are valid policy decisions. Of course, with an aging population, rising longevity and pay-as-you-go pensions, the Government needs to control state pension costs, to protect younger generations of taxpayers.

Increasing State Pension age saved huge sums to Exchequer: Estimates suggest the rise in women’s State Pension age between 2010 and 2016 saved over £5billion in public spending. There is a three-fold benefit for the Treasury. Firstly, not paying their pensions. Secondly, higher tax and national insurance receipts as women keep working while waiting for their State Pension. Thirdly, the additional should boost the economy.

But rising State Pension Ages have increased poverty: Many of the women waiting longer for their state pension have been pushed into poverty. Research from the Institute for Fiscal Studies found one in five women aged 60-62 were in income poverty when their state pension age was increased to 63 by 2016. The study showed that men have been affected by rising poverty too, as the starting age for receipt of means-tested Pension Credit has increased in line with rising women’s state pension ages.

 Governments failed to properly inform people about their state pension age rising: Obviously, policy changes of such magnitude need to be communicated well in advance, so the women are given time to prepare for delays in starting pension receipt. Unfortunately, as the BackTo60 and WASPI campaigns highlight, the failure to communicate clearly and effectively has caused real problems for many of the women affected.

Continued rise in pension ages makes no allowance for those who cannot work:  If older women can stay in work, they can probably manage without their state pension, but many are caring for loved ones, or in poor health, or facing ageism in the workplace so they are unable to do so. There is a stark cliff-edge between the benefits available to people below state pension age and those above it. Although this is designed to encourage more people to keep working, it makes no allowances for the significant minority of older people who genuinely cannot work. If they have no private pension or other savings, due to being disadvantaged throughout their lives by lower earnings and pension rights, then will be struggling.

I believe Government should help – perhaps with early access to state pension and pension credit if needed: Although it is not realistic to give all the 1950s-born women their State Pension back to age 60 – the cost would be over £150billion – I do believe Government has responsibility to help. As Pensions Minister, I proposed allowing early access to State Pension for those in poor health. This would finally recognise the significant differences in healthy life expectancy across the country, which mean some people genuinely cannot work. Also, those who are caring for others may need to retire. Yet, under current rules, even if they have paid decades of National Insurance, they cannot get a penny of their State Pension early. Another potential reform would see Government allowing people to claim Pension Credit before State Pension age, to help the poorest who would otherwise be in poverty. In light of the cost savings from increasing the State Pension Age, it should surely be possible to offer some mitigation for those worst affected. This could help both men and women.

I do hope the Government considers these proposals seriously.

 

Taken from Ros Altman’s blog

Screenshot 2019-10-06 at 18.45.32

 

 

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in pensions. Bookmark the permalink.

1 Response to My penny’s worth and a Quids-worth from Ros Altmann on #WASPI

  1. John Mather says:

    Aggregate total net wealth of all households in Great Britain was £12.7 trillion in July 2014 to June 2016, up 17% from the July 2012 to June 2014 figure of £10.9 trillion.
    Median household total net wealth was £262,400 in July 2014 to June 2016, up from £223,100 in the previous period (an increase of 18%).(ONS) This May well have fallen due to recent political chaos

    To buy the State Pension using an indexed annuity costs £306,000 at current rates to get the National Average wage from an annuity costs more than the LifeTime Allowance

    Our children are saddled with unfunded pension liabilities for the index linked public servant.

    The solution is not at the level of thinking that created this problem, if there was any thinking at all

    I might re read Animal Farm to understand the thinking

Leave a Reply