Government rejects calls to compensate ‘WASPI’ women in response to Opposition debate on women’s state pension age hikes
Pensions minister Guy Opperman says solutions proposed to appease the women affected are “unaffordable” and “cannot be justified”
Opperman defends much-criticised communications that accompanied state pension age changes in 1995 and 2011 Pension Acts
“This issue is not going to go away,” Labour warns
Tom Selby, senior analyst at AJ Bell, comments: “Time and again Opposition politicians have desperately tried to lever concessions out of the Government in relation to the women’s state pension age, and time and again the Government has refused to budge an inch. It seems clear the WASPI campaign’s only hope for salvation now rests on Jeremy Corbyn becoming the next Prime Minister.
“Labour’s manifesto pledges to extend Pension Credit to the most vulnerable women affected by the changes and explore transitional options. While it remains unclear what these transitional arrangements might look like, it seems unlikely they will meet the WASPI demand of a ‘bridging pension’ until state pension age.
“The Work and Pensions Committee’s suggestion that those affected should be able to access the state pension early and at a lower rate merits serious consideration, but it seems a Government mired in Brexit wrangling is unwilling to consider even this relatively modest, cost neutral change at the moment.
“Despite this latest blow, recent history suggests the WASPI campaign will continue to make noise and rattle cages in Westminster.”
Background
The argument over increases to the women’s state pension dates back to the 1995 Pensions Act. The Act set out plans to raise the state pension age for women from 60 to 65 between 2010 and 2020, and in the process bring it into line with the male state pension age.
The Pensions Act 2011 accelerated this timetable, meaning the women’s state pension age will now hit 65 by November 2018. The equalised state pension age will then rise to 66 by October 2020.
The Coalition Government originally wanted to increase the state pension age to 66 by April 2020 but was stung by criticism that some women would face having to wait as long as two years longer to receive their state pension under the proposals. The Government eventually agreed to limit any increases in the state pension age to 18 months, at an estimated cost of £1.1 billion.
The impact on women
There are broadly three tranches of women affected by the state pension age changes brought about by the 1995 and 2011 Pension Acts:
Those born between 6 April 1950 and 5 April 1953 have a state pension age of between 60 and 63. They reach state pension age by March 2016;
Those born between 6 April 1953 and 5 December 1953 have a state pension age of between 63 years and 3 months and 65. They reach state pension age by November 2018;
Those born between 6 December 1953 and 5 April 1960. They reach state pension age by 2020, or their 66th birthday.
The WASPI problem
A large number of women affected by the 1995 and 2011 Pension Acts argue they have been unfairly clobbered by the accelerated state pension increase. The Women Against State Pension Increases, or WASPI, group has consistently called for “fair transitional state pension arrangements” – namely a so-called ‘bridging pension’ from age 60 to their new state pension age.
An estimated 2.6 million women were affected by the changes brought about by the 2011 Act, with around 300,000* women born between 6 December 1953 and 5 October 1954 having their state pension age increased by 18 months.
Possible solutions
There have been calls from some quarters for the WASPI women to be compensated, with the Liberal Democrats suggesting all those affected should be paid a tax-free sum of £15,000**. If that was applied to all 2.6 million women affected by the changes brought about by the 2011 Pensions Act, it would cost the taxpayer about £39 billion.
Elsewhere, the Work and Pensions Committee suggested a solution whereby women affected have the option of accessing their state pension early but at an actuarially reduced, cost-neutral rate***.
**Source: https://www.moneymarketing.co.uk/waspi-women-given-15000-lib-dems-say/
***Source: https://publications.parliament.uk/pa/cm201516/cmselect/cmworpen/899/899.pdf