WASPI – thoughts on fairness

WASPI

I’m going to use this blog to pick out the key points arising from the restitution offer made by Labour to the WASPI women.

My conclusion is that this matter is best dealt with in the light of the determination of the Parliamentary Ombudsman, rather than in the run up to a general election.

Why? for three reasons.

  1. We need more awareness of the issues
  2. We need to know where to stop
  3. We need to decide if we even start

The only good I can see of Labour’s precipitative action is that it is made a lot of people think about the value of their state pension, and that engagement may be a help in other ways.


1. We need more awareness of the issues

The history of how the state pension increases that men and women were decided is long and complicated, the impact of these decisions is relatively easy to describe, the BBC has done us all a favour by doing so in this graph.

Screenshot 2019-11-26 at 06.11.55.png

Labour has decided to compensate women not just for the “losses” incurred from the 2011 changes, but from the 1995 changes as well. As the graph shows, most of the “damage” was done from the 1995 changes, the 2011 changes simply “added insult to injury”.

I’m putting the emotive words in inverted commas because they are the words I’d be using if I was arguing for compensation.

If I was not I could use more neutral or even positive words – replacing losses with “correction” , “damage” with “deferment” and argue that 2011 simply brought equality between men and women “quicker”.

I could argue that the changes correct a bias against men and for women, that women are not getting less – simply getting more later -as they live longer – both in absolute terms and relative to men. I could argue that neither the 1995 changes or 2011 changes are unfair at all.

I am not arguing either position, I am waiting to hear from the Parliamentary Ombudsman who will be taking a non-emotive decision based on a long-hard- look.

If the Labour post-manifesto intervention has merit, it is in raising awareness, though I think it is doing so in thoroughly the wrong way – and at the expense of a lot of other injustices which can be sorted out for a lot less than Labour’s solution for WASPI.


2. Fairness of the solution – where do you stop?

If the problem was as simple as the chart, we might be able to bottle it and solve it. But it isn’t.

Take the outliers, Mike Harrison is as ever on the money with his tweet.

And it’s not just women, men make up a good proportion of the savings from the 2011 changes in legislation around state pension age.

Screenshot 2019-11-24 at 07.16.28

I am such a man who would have expected to retire in 2026 and will now retire a year later “saving” DWP over £8,500 in today’s terms.

I don’t expect to get compensated because I am expecting to claim on my state pension for at least five years more than I expected when starting paying national insurance in 1979.

And I am not the only person who is worried about contagion

One question for the parliamentary ombudsman is “where do you stop”.

And that is before us men start our campaign.


3. Fairness of the solution – should you even start?

In my mind is the issue of pension transfers.

When Norman Fowler first admitted the principal that people could take a cash equivalent transfer back in the mid 1980s, he opened a pandora’s box , the winds from which whistle around this debate. In the early days of defined benefits , promises were made on the basis of best endeavours, they would be kept if there was money to keep them and they generally were.

The promises made by the state relating to the state pension and the various versions of the second state pension (SERPS) were made on a similar basis. There was always an assumption that the promise could and should change if there wasn’t enough money to meet the promise.

Clearly there is enough money to meet original pension promises but the promises have changed. We are no longer expecting to be paid our pensions till the end of our seventies but to the end of our eighties, the old lifespan of threescore years and ten is now underwater.

What Fowler did, which was wrong, was to say that there is a cash equivalent to a semi-defined promise. In doing so you create an expectation that the promise is fully defined.

If any politician successfully argues that WASPI deserve full restitution on the basis that the promises were guarantees and immutable, then we are stuck with a system of guaranteed state pensions that will be as ruinous to the British economy’s growth as DB guarantees have been to corporate growth (and the finances of the public sector to boot).

I have grave reservations about conceding the right of Government to control state pension age.

I am prepared to accept that where Government goes about changing that age in a sneaky way, there may be reparation , but that stops a long way short of the kind of compensation we grew up accepting as normal for mis-sold DB transfers.


In conclusion

I think the Labour parties reckless offer to the 3.7m women , selected for their offer is one of the most irresponsible acts of financial vandalism we have seen in my 40 years as a voter.

If you want to see how you might be impacted, you can use Labour’s calculator to work out your bung. If you miss out choose anyone female with dates of birth in the range , pretend to be your Mum, daughter of just your best friend.

Here are two well known recipients of Labours largesse

Suzy.png   Here are a few more

 

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 #WASPI, advice gap, age wage, pensions and tagged , , , , , . Bookmark the permalink.

5 Responses to WASPI – thoughts on fairness

  1. stefan zaitschenko says:

    Can’t agree Henry but I don’t suppose that matters. Quoting the nasty trolls who plague the 1950s women is a low. No mechanism for compensation will be universally acceptable.

    I disagree with higher rate Pension Tax Relief and wish that had been addressed too. But the world is not perfect

  2. julierichardswbacom says:

    your language may be a little emotive Henry but I agree with your basic premise and do not believe any payment is warranted.

  3. henry tapper says:

    Stefan – I don’t think Suzie a troll, I think she makes a good point – one that John Ralfe makes, that we need to target support where it is most needed .

  4. Eugen N says:

    The problem would be simple if women were not disadvantaged during their 70thies and 80thies. Lower pay than men for the same job, National Insurance rates for married women, employment contracts than ended on marriage etc.

    I think that some restitution is needed, but probably less than £58 billion, or means tested.

    My understanding is that the average State pension paid to a women is approx. £27/ week less than the average men. £126/ week for a woman v £153/ week for a man.

  5. henry tapper says:

    I’m looking at the Martin Lewis Money Saving Expert poll on this and your views are pretty much bang on for someone your age and sex. It’s interesting to see how much age and sex changes the responses – the poll is here https://www.moneysavingexpert.com/poll/26-11-2019/should-1950s-waspi-women-be-compensated-

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