Now state pension ages are equalised, let’s fix the real problems

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Today is a day for celebration. After nearly 60 years of inequality and discrimination – originally against women, and more recently against men – the state pension age is at last the same for men and women. For one day only, both men and women will retire at 65. Tomorrow, the state pension age for both men and women will start rising again in lockstep, reaching 66 by 2020 and then to 67 and 68.

I make no apology for celebrating the equalisation of pension ages. In my view this is long overdue. I have expected it all of my working life, having first discussed it when I was still at school. I never thought it was fair that my brother 14 months younger than me should receive his state pension 6 years and 4 months later than me. We both work for our livings and we have both brought up children. Life has dealt us different cards – I am significantly poorer than him – but that is not a reason for me to have a much earlier state pension purely by virtue of being female.

That said, the rise in state pension ages has caused distress and hardship to some women, and indeed to some men, as I shall explain. And the forthcoming rise to 66 is set to cause even more hardship. Something needs to be done.

I don’t believe the solution is to restore the lost state pensions of women born in the 1950s, or give them any kind of “bridging pension”. To do so would be to excuse them from the consequences of laws passed decades ago. It would also restore the discrimination against men that has been ended today. I would rather see a solution that preserves this hard-won equality between the sexes while relieving the hardship that state pension age rises create for some people.

In my view there are two groups of people who are disproportionately hurt by women’s state pension age rises.

1. Women born in 1953-4 whose state pension age was raised a second time at short notice in the 2011 Act.
The 2011 Act accelerated the timetable for the 2007 Act, under which state pension age for both men and women would rise to 66, by six years. This truncated the 10-year transition under the 1995 Act which was already in progress. As a result, women born in the second half of the 1995 transition group – those born April 1953 to April 1955 – had rises of up to 18 months in their state pension age at very short notice. That was 6 months more than men of their age. Admittedly, the state pension age for most of these women was below that of men, so it could be argued that a larger state pension age increase is not discriminatory. But it was undoubtedly unfair. Many of these women had prepared for the rise of up to 5 years in their state pension age under the 1995 Act. The additional wait imposed at short notice was unfair and distressing.

I originally thought the 2011 timetable should be relaxed so that the rise to 66 did not start until 2020 when the 1995 transition was planned to complete. But that ship has now sailed. The accelerated 1995 Act transition is complete. Women born in 1953 are receiving their state pensions. So I now think there should be compensation for this small group of women (about 500,000). At the very least, they should be compensated for the additional 6 months rise over and above the rise imposed on men of their age. This compensation should not be means tested.

2.  Women and men in their early 60s who are claiming benefits. 

This is a much larger group and one which is severely disadvantaged not only by the state pension age rises, but also – more significantly – by the mess that ten years of cuts, freezes and ill-considered (and often brutal) reforms have made of the working-age benefits system.

It is self-evident that a woman in her early 60s who is unable to work through illness or disability, or who is unable to find work, has suffered a significant loss. Instead of receiving a pension, she is obliged to justify her benefits claim, either by proving she is ill or disabled enough not to be able to work, or by proving that she cannot find work. The amount of money she receives is considerably less than her state pension would have been. It is even less than Pension Credit. Women find the process of applying for benefits stressful and demeaning, and many struggle to live on the pitiful income our society sees fit to give to those who, due to circumstances beyond their control, are unable to work. 

It is less widely known that a man in his early 60s who is unable to work through illness or disability, or who is unable to find work, has also suffered a significant loss. Prior to state pension age equalisation, men could claim Pension Credit at women’s state pension age. As women’s state pension age rose, men of the same age lost this right. They are now similarly obliged to navigate the harsh, complex and demeaning benefits system, and even if successful, live on an income far below what they would have received from Pension Credit.

There are two possible solutions to this problem. Pension Credit still exists, so one solution might be extend it to women and men born in the 1950s who have not yet reached state pension age. Labour has suggested something along these lines, as has the cross-party APPG, although so far both have failed to recognise the need to extend this to men as well as women. However, this solution would cause further problems:

–  it would encourage women to whom Pension Credit was extended to believe that they are pensioners rather than working age women, and therefore reinforce calls for reinstatement of their full state pension

–  it would be unfair to younger men and women who would be denied Pension Credit in their 60s.

In my view a much better solution would be radical reform of the working-age benefits system. The reforms I would propose are both general and specific to older people. This is my list. It is not exhaustive.

General reforms

  • If 1950s women can’t live on ESA/JSA/Universal Credit, neither can anyone. Benefits payments have been frozen since 2015. They need uprating.
  • Carer’s allowance needs to be raised to the minimum wage.
  • Work allowances were increased in the Budget, which was welcome, but marginal tax rates are still too high. Work allowances need to be progressively raised in the next few budgets to reduce marginal tax rates and restore work incentives.
  • The Work Capability Assessment should be carried out by people’s own GPs or practice nurses, not by poorly trained assessors who are financially rewarded for finding people fit for work
  • The sanctions regime should be softened and full right of appeal restored. Sanctioning people on ESA (or the Universal Credit equivalent) must stop completely.

Specific reforms for older people

  • The savings cap starts to bite at £6,000 and completes at £16,000. This is far too low for people close to retirement. People close to retirement do not have time to rebuild savings, and they will need those savings in later life. The savings cap should be lifted for people over 60.
  • The work capability assessment, jobsearch requirement and sanctions regime should be ended for people over 60. However, people over 60 should still have support to help them find work.
  • The Universal Credit rules about hours worked need to be relaxed for people over 60. Older people should not be expected to increase their hours to qualify for benefits. Many people need to reduce their working hours as they approach state pension age, and they should not be penalised for this.
     
  • Could consider an equivalent of Work Allowances for people who have unearned income, for example from a works pension, so that they can still receive benefits even though they have some income.

I am well aware that these are comprehensive reforms and would be expensive. But what kind of society are we, if we cannot support our most vulnerable people or enable people close to retirement to live with dignity?

Of course, an even better reform would be a universal basic income, supported by comprehensive universal services and funded by taxes on property and capital. But we are a long way from that, and we have an immediate problem that desperately needs addressing. We should never have shredded our welfare state like this.

Although I don’t support the WASPI and Back to 60 campaigns, I am grateful to them for – along with others – highlighting how callous we have become. Frightened by the financial crisis, we have played out yet again the cycle of harshness into which Britain has been locked for centuries. We need to rediscover the spirit of generosity.

Related reading:

The road to the workhouse
Pensions and stuff

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