Please see below article received from AJ Bell yesterday afternoon, which hints that chances of a u-turn on when you can take your entitlement look slim. At the end of the commentary, you will also find our view on the matter.
Today men and women in the UK have the same state pension age of 66. This has not always been the case, however.
Prior to 2010, women received their state pension from age 60, while men had to wait until age 65. The 1995 Pensions Act first put forward proposals to increase the women’s state pension age to 65 – bringing it into line with men – between 2010 and 2020.
The 2011 Pensions Act accelerated this timetable, meaning state pension ages were equalised at age 65 in 2018 before increasing to age 66 by 2020.
From here, plans are in place to increase the state pension age to 67 by 2028 and 68 by 2046 (although the Government has previously indicated this could be brought forward to 2039).
Campaigners have long argued the changes introduced under the 1995 and 2011 Pensions Acts were unfair to women born in the 1950s, with some forced to wait six years longer than expected to receive their state pension.
One of the central charges was that the Department for Work and Pensions (DWP) failed to adequately notify affected women so they could adjust their retirement plans.
This case was considered recently by the Parliamentary and Health Service Ombudsman (PHSO), which investigated complaints that since 1995 the DWP had failed to provide ‘accurate, adequate and timely information about changes to the state pension age for women’.
The Ombudsman concluded that the DWP did not adequately respond to research in 2004 which recommended information should be ’appropriately targeted‘ at those affected by the reforms. As a result, it found maladministration had occurred.
While the Ombudsman’s finding may feel like vindication to the so-called ‘WASPI’ (Women Against State Pension Increases) campaigners, it has no power to compel the Government to provide compensation or redress.
In 2019 the High Court heard arguments that the state pension age increase discriminated on the ground of age and/or sex and sought a judicial review of the Government’s ‘alleged failure to inform them of the changes’.
The Court dismissed the claim on all three counts, and an appeal to the Court of Appeal in 2020 was also thrown out.
The Government has previously said putting men’s and women’s state pension ages back to 60 could cost £215 billion. Given the impact coronavirus has had on the UK’s finances, it seems extremely unlikely the Government will cough up this amount of money – or anything at all for that matter – if it is not compelled to.
P and B Comment
From my point of view, I don’t think there is any chance of State Pension age being lowered. It makes great economic sense for the State to keep putting State Pension age back, age 68 or even age 70 at some point. A later State Pension age saves money for the State by not paying it out as early and probably keeping the majority of people in work, therefore generating higher income tax receipts.
In context, when real State Pensions commenced in a similar format to todays a few years after the end of World War II, the average man would have retired at age 65 and would have died about 2 years later. Now, we could be looking at an average of 15 years of inflation linked income with potentially another 10, 15 or 20 years for those with good longevity.
The cost to the State is enormous and as we live longer, it will increase. The ageing demographic – you can also add to the healthcare cost too.
One of the key messages I believe is to educate people about the State Pension and other pensions such as Workplace Pension provision. If the young working population join pensions early, and fund them at a good level, they won’t be as reliant on the State Pension. This could really make a difference to your lifestyle in retirement.
Steve Speed DipPFS