woman at desk
December 2015

There are a range of changes to the state pension which affect women born in the 1950s; depending on their circumstances, some women will be included in the single tier pension and others will not. This briefing looks specifically at the impact of measures to equalise the state pension age.

Key Facts

  • Legislation to equalise the state pension age at 65 by 2020 was agreed in 1995.
  • The  2011  Pensions  Act speeded  up  the  equalisation  process  and  increased  state pension age to 66 by 2020 for both men and women.
  • More recent legislation has raised the state pension age to 67 by 2028.
  • The  Single-Tier  flat  rate  state  pension  will  replace  the  current  basic  and  additional pensions for  people  reaching  state  pension  age  on  or  after  6th April  2016.  It  will  be introduced at the rate of £155.65 per week.


Equalisation of state pension age

Following the Pensions Act 2011 women’s state pension age will reach 65 by November 2018 and then state pension age for both men and women will increase to 66 by October 2020. The 2014 Pensions Act increases state pension age from 66 to 67 between April  2026  and  2028.  It  also  sets  up reviews  of  state  pension  age to  be  carried  out  about every five years with the first one to be published in 2017.

The reviews will be informed by analysis from the Government Actuary’s Department and by the views of an independently led body that is expected to take into account factors such as  the  variation  in  life  expectancy,  trends  in  healthy  life  expectancy  and  labour  market factors.

Age UK recognises that as life expectancy increases it is reasonable to consider extending working lives. However we believe it is very important to consider a range of factors such as the   differences   in   healthy   life   expectancy   between   different   groups,   and   varying employment opportunities for continued working in later life.

Age  UK  is  concerned  about  the  impact of  longer  working  lives  for  people  in  poor  health, particularly  given  the  considerable  health  inequalities  across  the  country.  It  is  vital  that when  making  changes  to  the  state  pension  age,  proper  provision  is  made  for  those  who aren’t able to work due to ill health or are caring for family members and the thousands of  people who struggle to find employment in later life. There needs to be greater clarity about the review and any subsequent uprating process.

It is also essential that people have sufficient notice of any changes in state pension age in order to make or revise their plans for retirement. Any changes to state pension age must provide people with at least 10 years notice.

Communication of pension changes

It is  one  thing  for  Parliament  to  pass  a  law  and  another  for  people  to  be  aware  of  it  and there  are many women  who throughout  their  working  life  expected  to  receive their  state pension age at 60 and were shocked to find out when they were approaching that age that the rules had changed. While the DWP has written to women affected this did not start to happen until more than a decade after the 1995 changes and some women say they did not
receive  a  letter. It  is vitally  important  that  people  are  given  enough  notice  about  any changes to the state pension so they can properly plan and save for their retirement.

It is  worrying  and  disappointing  that  so  many  women have had sharp  increases  in  their State Pension age with little time to plan. The Department for Work and Pensions needs to do more to ensure messages about changes to the state pension are heard loud and clear by the people affected.

Under-pensioned women

Pensions  changes  are  not  confined  to  the  state  pension.  Inadequate  levels  of private pension saving could also affect women’s future financial security and make access to the State Pension even more important. Research conducted by the Pensions Policy Institute, with Age UK, shows that a third of women in work are ineligible for automatic enrolment into a workplace pension, leaving many at risk of not having a decent income in later life. This compares with 16 per cent of male employees.

The research highlights that just under a quarter (23 per cent) of all employees do not meet the  qualifying  criteria  and  of  these  57  per  cent  are  ineligible  because  they  earn  less  than £10,000  a  year.  This  illustrates  not  only  the  problems  faced  by  many  women  workers  but also  disabled  workers, ethnic minorities,  recipients  of  Carer’s Allowance,  those  with  more than  one  part  time  job  and  people  who  work  in  the  service  industry.

These  figures, however,  only  include  people  who  are  employees,  and  there  are  many  more  who  do  not qualify  because  they  are  self-employed  or  not  in  work.  Of  the  total population aged  16-64 about half qualify for automatic enrolment.

The  recent Scottish  Widows  Women  and  Pensions  Report  2015 also  finds  a  persistent gender gap in pensions, with 52 per cent of women saving adequately, and with women’s average monthly savings standing at £105 compared to £177 for their male peers.

Age UK believes that it is important to look across the state and private pensions landscape to  consider  the  overall  impact  of changes on groups that  have  traditionally  been  under-pensioned,  such  as  women.  There  should  be  an  urgent  review  of  the  equality  impact  of  pension changes.

If  you  have  any  questions  or  would  like  future  information  please  contact  Angela Kitching, Head of Public Affairs, at angela.kitching@ageuk.org.uk