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Women hit by pension age changes 'may retire earlier for reduced pay' Women hit by pension age changes 'may retire earlier for reduced pay'
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Women in their 50s who were given little notice that they would have to work longer before retirement could be offered a chance to give up work earlier with a reduced pension, a committee of MPs has said.Women in their 50s who were given little notice that they would have to work longer before retirement could be offered a chance to give up work earlier with a reduced pension, a committee of MPs has said.
The suggestion for government action comes after several hundred thousand women born in the 1950s had their retirement plans set back by state pension age increases.The suggestion for government action comes after several hundred thousand women born in the 1950s had their retirement plans set back by state pension age increases.
The work and pensions select committee published an interim report on Tuesday, which said ministers should consider offering the women the option to retire earlier, with a slight cut in their pension.The work and pensions select committee published an interim report on Tuesday, which said ministers should consider offering the women the option to retire earlier, with a slight cut in their pension.
Frank Field, the chair of the committee, said: “This interim report opens up the debate which I’m sure MPs from all sides will want to pursue. We will begin taking fuller evidence on the options as soon as possible.”Frank Field, the chair of the committee, said: “This interim report opens up the debate which I’m sure MPs from all sides will want to pursue. We will begin taking fuller evidence on the options as soon as possible.”
For many years, the state pension age [SPA] for men was 65 and the state pension age for women was 60.For many years, the state pension age [SPA] for men was 65 and the state pension age for women was 60.
From 2020, both men and women’s state pension age will be 66, increasing to 67 between 2026 and 2028, and then linked to life expectancy after that.From 2020, both men and women’s state pension age will be 66, increasing to 67 between 2026 and 2028, and then linked to life expectancy after that.
An increase to 65, phased in between 2010 and 2020, was included in the Pensions Act 1995, but in 2011 the coalition government pushed through a speeding up of the latter part of the timetable.An increase to 65, phased in between 2010 and 2020, was included in the Pensions Act 1995, but in 2011 the coalition government pushed through a speeding up of the latter part of the timetable.
A one-year difference in age can result in a three-and-a-half-year difference in the SPA, and some of the affected women say they will effectively suffer a loss of up to £30,000 as a result of having to wait longer for their state pension. A one year difference in age can result in a three-and-a-half-year difference in the SPA, and some of the affected women say they will effectively suffer a loss of up to £30,000 as a result of having to wait longer for their state pension.
It has emerged that the government did not write to any women affected by the rise in the pension age for nearly 14 years after the law was passed in 1995.It has emerged that the government did not write to any women affected by the rise in the pension age for nearly 14 years after the law was passed in 1995.
A summary of the report said the committee considered a number of possible options for recalculating women’s pensions for those born in the 1950s, but found most were too expensive.A summary of the report said the committee considered a number of possible options for recalculating women’s pensions for those born in the 1950s, but found most were too expensive.
“We were, however, interested in an idea that was proposed of permitting early retirement, from a specified age and for a defined cohort of women, on an actuarially neutral basis,” said the summary.“We were, however, interested in an idea that was proposed of permitting early retirement, from a specified age and for a defined cohort of women, on an actuarially neutral basis,” said the summary.
“This arrangement, which features in some defined benefit occupational pension schemes, would permit women in that specified age group to choose to take a state pension sooner than scheduled in return for lower weekly payments for the duration of their retirements.”“This arrangement, which features in some defined benefit occupational pension schemes, would permit women in that specified age group to choose to take a state pension sooner than scheduled in return for lower weekly payments for the duration of their retirements.”
The committee said that their suggestion leaves “several questions” that will have to be addressed before allowing early retirement.The committee said that their suggestion leaves “several questions” that will have to be addressed before allowing early retirement.
“The details and limits of eligibility, and the rationale for this relative to those earlier or later, would need to be determined, including the position of men at 65,” added the summary.“The details and limits of eligibility, and the rationale for this relative to those earlier or later, would need to be determined, including the position of men at 65,” added the summary.
“It would bring forward some public spending, as an unknown number of women would take their state pension early. This would increase public sector net borrowing in the short term in return for a longer term reduction. The total fiscal impact would not be known until all the relevant pensions ceased to be paid.”“It would bring forward some public spending, as an unknown number of women would take their state pension early. This would increase public sector net borrowing in the short term in return for a longer term reduction. The total fiscal impact would not be known until all the relevant pensions ceased to be paid.”
However, the committee urged the government to consider early retirement as an option.However, the committee urged the government to consider early retirement as an option.
“As this was not the focus of our inquiry the committee has not taken much evidence on this idea. We intend to in the coming weeks. It is, however, an interesting option and one the government should explore,” the report’s summary concluded.“As this was not the focus of our inquiry the committee has not taken much evidence on this idea. We intend to in the coming weeks. It is, however, an interesting option and one the government should explore,” the report’s summary concluded.
A Department for Work and Pensions spokesperson said: “The government has already listened to concerns expressed by those affected by the 2011 changes, and took action to limit the maximum change to state pension age to 18 months, a concession worth over £1bn.A Department for Work and Pensions spokesperson said: “The government has already listened to concerns expressed by those affected by the 2011 changes, and took action to limit the maximum change to state pension age to 18 months, a concession worth over £1bn.
“Women retiring today can still expect to receive the state pension for 26 years on average – four years longer than men.”“Women retiring today can still expect to receive the state pension for 26 years on average – four years longer than men.”