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AJ Bell: Colossal implications if pension age for women is lowered

The tax implications of reversing the state pension age increase for women would result in an unprecedented stretch on the national economy, according to AJ Bell.

The statement follows government analysis figures that show reversing the state pension age increase for women would cost the Treasury £181bn by 2025/26.

The analysis has been published ahead of the High Court judicial review into whether women born in the 1950s have been discriminated against.

AJ Bell senior analyst Tom Selby says an £181bn hole in the UK’s finances would be colossal.

How advisers can help clients realise the value of the state pension

He says: “These eye-watering costs explain why the government has been so steadfast in refusing to rethink controversial increases to the state pension age for women.

“While those affected are understandably aggrieved at the impact the hike has had on their retirement plans and the lack of notice given, paying out £181bn to those affected would leave a gaping black hole in the nation’s finances.”

A shock state pension bill would also be difficult for the government to swallow, Selby adds.

“With a no deal Brexit now firmly on the table with Conservative leadership candidates, a shock state pension bill is absolutely the last thing the government needs.”

Pensions committee chair seeks answers on Waspi complaints

If the pensions age were to be lowered again, the hole left by the £181bn would likely fall on the shoulders of Generation Y, he adds.

“That black hole would need to be filled one way or another. In all likelihood, it would precipitate a stiff increase in taxes and therefore an immediate transfer of wealth from millennials to baby boomers.”

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. I agree, but I daresay those that feel agrieved by a reduction in their pension benefits care little (in all honesty) for the future generation who are likely to have to make massive financial sacrifices. After all they won’t be here.

  2. This argument fails to acknowledge that the increase in State pension age for women born in the 50s already represents a transfer of wealth from those women to younger generations. Women who have already paid more tax and national insurance into the system than those younger generations.

    That said the Intergenerational argument is a distraction from the real issue here which is poor communication from DWP to those affected by these changes.

    In a week when we learn that 360,000 State pension forecasts are wrong, when incorrect penalty notices have had to be withdrawn from high income parents in receipt of Child Benefit and when thousands of pensioners face a reduction in their State pension due to DWP accounting errors it is the DWP who need to up their communication game..

    Those planning their retirement at all ages deserve accurate information and consistency from the Stare pension scheme not mistakes and last minute changes to the rules, which is what 1950s women are facing.

    • Very true and, apparently, Boris Johnson thinks there is plenty of money he can give to higher rate tax payers, which could have gone a small way to helping women who have been left, totally, in the lurch.
      It’s still a mans world I’m afraid.

  3. Its a fact that consecutive governments reduced and then ceased paying the amount they should have paid into the NI fund over 20+ years which amounted to £271 billion stolen from every person of ALL age groups still paying NI, if that were paid back taking the £181 billion into account there would now be a surplus of £90 billion in the NI account take into account also the last years surplus was used from NI fund to pay off the national debt, there would have been plenty in this fund had it not been plundered. ALL age groups have had their pension money stolen

    • Trevor Harrington 10th June 2019 at 9:14 am

      Excellent – well said Jane.

      As a nation which has failed in one of its most basic requirements, that of providing some simple financial security for the elderly through a basic state pensions (at a proper age), we need to go very much further with this conversation.

      For journalists to just point out that there is a shortfall in state pension provision is simply stating the patently obvious.

      As a nation, we need to continue, and develop, the discussion into – where has the money been spent instead, and who spent it ?

      Successive Governments of all political persuasions are most certainly to blame, but in microanalysis the Blair and Brown years are particularly notable, in stark reality, for their huge, and massively destructive, overspend.

      Politicians must be brought to realise, that the growing majority of the voting public are generally not misled by their idiotic financial bribes in order to secure our votes.

      The Conservative leadership race has already fallen into this despicable routine, and as regards Mr Corbyn’s suggestion that we re-nationalise certain parts of UK industry, well that is pure bribery, verging on corruption, and outright theft from everybody’s pension fund throughout the Country – quite apart from the fact that we know from past experience that nationalised industries cease to function economically.

    • @ Jane

      Do you know whether the government’s decision to abolish the treasury supplement was raised as part of the Judicial Review?

  4. David Bennett 9th June 2019 at 8:06 am

    Having this disparity in retirement ages was always going to be a problem.

    Particularly as women tend to live longer anyway.

    • You have to remember how society worked, many years ago, when the family work structure was totally different to today. They should never have tried to resolve the problems of a changing world by penalising women more than anyone else.

  5. The Judicial Review is a legal matter. If the changes under review are shown to be illegal and/or discriminatory, then the government has the responsibility to put this right. That would obviously raise difficult questions about how to raise and save money, but that should not be the concern of the claimants.

    Likewise, if the Judicial Review is rejected, this should be respected, and any discussion around state pension changes needs to move on from the “we wuz robbed” rhetoric.

    Either way, credit to Back to 60 for securing the services of a legal heavyweight like Michael Mansfield, and getting to the point where the government is being held accountable in a court of law. While WASPI bickered and dithered and soaked up meaningless platitudes from politicians, Back to 60 got on with the job and took direct action. Whatever you think of the merits of their case, you have to respect what they have done to get here.

  6. If this does go through, one obvious way to pay for part of it would be to end the triple lock for all pensioners.

    That could help remove the accusation that it is a generational wealth transfer, but could be bad news for all pensioners.

  7. State pension problems are caused by the government raiding the NI coffers over the years. And something you pay for is not a “benefit”. For answer ask almost any European country, as most have bdttet pensions at an earlier age than the “rich” UK.My suggestion? Tax the multinationals properly Amazon and Microsoft.

    • I’ve asked a similar question in the follow-up article, but do you have any more details on these government raids of the National Insurance fund? When did it happen, how much was taken, and what was it used to fund?

      The state pension is legally a contributory benefit.

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