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Gender politics of pensions

The Government’s recent pension proposals have some important implications specifically for women

I have heard that the Government is increasing the retirement age for women from 60 to 66. As a woman in my early 60s, how will this affect me? I have several small occupational pensions from different employers. Will this affect the age at which I can receive a pension from them?

Plans to raise the state pension age from 65 to 66 were announced during the recent Government spending review. The previous Government had planned to increase the state pension age for women from 60 to 65 by 2020 and to 66 by 2026. These new proposals mean that, for women, the state pension age will become 65 by 2018 (two years earlier) and then 66 by 2020.

The proposals have been denounced as grossly unfair to women, who will see the state pension age rise to age 66 at a much faster pace than for men.

The proposals still require legislation to bring them into force but they are unlikely to change in an environment where the Government needs to deal with a massive budget deficit and face up to the challenges of longer life expectancy.

As you are in your early 60s and have already reached state pension age, this change will have minimal impact on you.

The proposals have a direct impact on those born between April 6, 1953 and April 5, 1960.

If you were a couple of years younger, you would have had to wait longer before claiming your state pension.

However, there are some other important changes to the state pension that could have an impact on your income in retirement.

Under Government plans to ensure that everyone has a “decent” level of minimum income in retirement, that state pension is likely to be increased to around £140 a week by 2015.

It is currently paid at £97.65 a week for a single person and £156.15 for a couple.

Increasing the state pension to a flat rate of £140 a week will require the removal of the current means-tested pension credit, which ensures a minimum income of £132.60 for single people or £202.40 per week for couples.

These proposed changes are particularly good news for women, as they often lose out on a full state pension due to an incomplete national insurance contribution record. As the state pension is likely to become based on residency rather than national insurance contributions, women who have spent time raising children or caring for relatives will not be disadvantaged.

Another recent change to the state pension relates to how it increases each year in line with inflation.

From April 2011, the state pension will grow in line with the higher of earnings, prices or 2.5 per cent. This should protect people in retirement from the risk of very low or even negative inflation in the future, as the minimum your state pension will increase by will be 2.5 per cent a year.

If earnings or price inflation is higher than 2.5 per cent, your state pension will rise by this amount instead.

The age at which you can take benefits from your workplace pensions will not change as a result of these proposed changes.

The Government does have some plans to allow occupational pension schemes to link their pension benefits to the typically slower-growing consumer price index, rather than the retail price index. However, individual pension schemes would need to change their own rules to make this change.

Nick Bamford is chief executive of Informed Choice

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  1. If the basic state pension is increasd to £140pw will I still receive my additional pension amounts that make up my full state pension
    Thank you

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