Millennial man Tom Selby of AJ Bell recently argued the country could not afford a reversal of state retirement age for 1950s women and that to do so would create an unfair burden on younger generations asked to subsidise this change.
As a 1950s-born woman I would like to explain why the intergenerational subsidy is in fact from these women to the younger generation.
It has arisen from the continuous raiding of the national insurance fund by successive governments, of all persuasions, to subsidise spending in other areas. Had this raid on NI contributions not taken place, the national insurance fund would be capable of funding pensions from age 60, without the need for any taxpayer subsidy. Indeed, in the interests of gender equality, the retirement age for men and women could have been set somewhere between 60 and 65.
In the 1970s there was no auto enrolment pensions subsidised with tax relief and until the 1990s it was legal to offer women inferior pension rights to men. Rights to a frozen pension required five years’ service until 1986 with more women than men missing out due to career breaks to have children, thus sacrificing their pensions and earnings potential for the next generation. Maternity leave was much less generous and paternity leave non-existent. There was no government funded subsidy for childcare costs, with women who chose to return to work paying for childcare out of their net of tax earnings.
Back then only 12.5 per cent of the population went into higher education, compared to 49 per cent today. Raiding the NI fund to pay for the expansion of higher education, generous statutory maternity pay and child care subsidy has benefited the younger generation. While all these innovations are welcome, they have been earned by the tax and NI contributions made by older women, who are now facing hardship due to successive and rapid changes in the state pension age, of which they were not warned until very recently.
Unless you are a woman who reached adulthood in the 1970s it is hard to understand the unlevel playing field which many of these women faced in employment and the sexist assumptions which ruled the early part of their working lives, leaving women at 65 today with one fifth of the pension accrued by their male contemporaries.
While the Equal Pay and Sex Discrimination Acts came into being in the mid-70s, many 1950s-born women had been working for less pay and paying national insurance from a decade earlier. Employment practices did not always reflect the law. As late as the 1980s it was common for women interviewees to be asked about their plans for marriage and children and normal for women to have to outperform their male contemporaries to get the same job.
The biggest failure of all is not a lack of understanding between generations but the failure of governments, since 1995, to communicate successive changes in state retirement age to those affected by them. In the recent court hearing counsel for the Department for Work and Pensions argued there was no legal duty for the government to tell every person affected by this change.
While legally that may be correct, morally and practically it is indefensible. The cost of a letter to every woman affected would have been a drop in the ocean compared to the legal costs and the misery which left these women uninformed and unprepared for a six-year extension in their state retirement age.
Kay Ingram is director of public policy at LEBC Group