Labour plans to allow women born in the 1950s to access their state pension early at a lower rate, according to reports
Proposal expected to benefit women born between 1954 and 1960 and will be “cost neutral”
While increasing pressure on Government to act Jeremy Corbyn remains powerless to enact change in Opposition
Tom Selby, senior analyst at AJ Bell, comments:
“This feels more like Labour playing to the pensions gallery than a serious long-term reform plan. Indeed, many of the women affected by state pension age equalisation will already be in their sixties, so even if Jeremy Corbyn were to get the keys to Number Ten the extent to which those most affected will benefit is shrinking all the time.
“If the Conservatives cling to power for the next few years and remain steadfast in rejecting calls to help these women then for many this will be too little, too late.
“That said - and we still await precise details on Labour’s state pension age policy - there is merit in exploring options to make the state pension more flexible. Indeed, there is no obvious reason such a reform should be restricted to a specific cohort of women provided it is done on a cost neutral basis. Such reform would tally with the pension freedoms and could be particularly helpful to those in physically demanding jobs.
“However, policymakers will need to avoid creating extra complexity, while the potential impact on Treasury finances if lots of people decide to take their state pension early would also need to be considered.”
The WASPI problem – a potted history
Former Chancellor Ken Clarke announced the state pension age (SPA) of women and men would equalise at 65. The change would be phased in over ten years from 2010
Pensions Act 1995 formalised the proposals
Pensions Act 2011 accelerated the proposed timetable, starting in April 2016 when women’s SPA was 63 so that it will now reach 65 in November 2018. The equalised SPA would then rise to 66 by October 2020
The Government subsequently amended the timetable due to the short notice of significant increases given to some women. This limited the maximum increase under the Act at 18 months, costing the Exchequer £1.1billion
In a March 2015 report on Communication of State Pension age changes, the Work and Pensions Select Committee concluded that “more could and should have been done” to communicate the changes and called on the Government to “explore the option of permitting a defined group of women who have been affected by state pension age changes to take early retirement, from a specified age, on an "actuarially neutral basis”
If you want more detail this briefing note from the House of Commons Library is a useful starting point.