Labour shadow work and pensions secretary Debbie Abrahams is to reveal new plans at the party’s Brighton conference, to enable women born between 1954 and 1960 to claim a reduced state pension from the age of 64 rather than 66.
The plans are presented as compensation for the mismanaged plight of the 2.6 million so-called WASPI women, whose retirement plans were thrown into disarray by the accelerated raising of women’s state pension age over recent years.
The proposals to be outlined are described as ‘cost-neutral in the long run’ and Labour says they should be put into action ‘immediately’. But commentators have questioned how meaningful such announcements can be, describing the plans as likely to be ‘too little, too late’.
Steve Webb, director of policy at Royal London, points out that given the length of time involved in changing the law, even on the assumption that it is adopted by the government, the women who were hardest hit by the changes to women’s state pension age are likely to be receiving a state pension anyway by the time the legislation is enacted.
‘Writing new primary legislation, getting it through parliament and implementing the change on the ground is likely to take at least two years. If this legislation completed its passage through parliament during the 2018/19 session, it would take at least another year to change government computer systems and to communicate effectively to all those who might be affected.’
‘This feels more like Labour playing to the pensions gallery than a serious long-term reform plan,’ agrees Tom Selby, senior analyst at AJ Bell. ‘Indeed, many of the women affected by state pension age equalisation will already be in their 60s, 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.’
Nathan Long, senior pension analyst at Hargreaves Lansdown, suggests this means pensions might have to be backdated: ‘As time is running to provide any meaningful change, it begs the question as to whether any compensation would be retrospective should Labour gain power.’
There is a further problem in that the legislation would likely be challenged on grounds of sex discrimination, adds Webb. ‘Under equalities legislation it is unlikely that this new option could be made available only to women.’
However, Selby sees merit in the basic principle of a more flexible state pension that could benefit other groups who are likely to struggle to work to a later state pension age. For those who cannot work to the state pension age as it is gradually moved back, there is currently no opportunity to take a lower state pension at an earlier age in the same way that you can take a lower pension on early retirement from some company pension schemes.
'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,’ Selby says. ‘Such reform would tally with the pension freedoms and could be particularly helpful to those in physically demanding jobs.’ But he warns against ‘extra complexity’.
Moreover, argues Webb, there would be additional practical problems in allowing people to opt for an early pension which is permanently paid at a lower level than the full state pension. ‘For example, if the scheme is to be cost neutral, they would not be allowed to claim pension credit or other benefits to top up their low income. But if they could not do so then they could be living permanently below the poverty line throughout their retirement’.
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