A government-commissioned review of the state pension age has asked for more information on how to make sure any changes to entitlements take women’s lower pension incomes into account.
Former Confederation of British Industry director general John Cridland was asked by the government to lead a review of the state pension age in March.
In a preliminary report outlining key issues the review will address, Cridland asks stakeholders for suggestions on how to take women’s lower pension incomes into account in future state pension age changes.
The review estimates men have around a 25 per cent higher income than women in their first year of retirement, a difference of around £3,000.
Cridland says this gap will narrow for those born between 1966 and 1979, but is likely to widen again thereafter.
He says this is because, while auto-enrolment coverage and the decline in defined benefit incomes will benefit women more than men, men’s “higher earnings and women taking time out of the labour market” would offset this.
The report reads: “Women appear to be consistently overrepresented in the most impacted groups. We do recognise for many couples today decisions around work and caring have been taken jointly and for them the important factor may be overall household pension income.”
It then asks for feedback on the question: “What is the best way to take into account the lower pension outcomes for women in our recommendations?”
The report does not directly reference the Women Against State Pension Inequality campaign, which calls for transitional measures to mitigate increases in women’s state pension age for those born in the 1950s.
However, it does note the campaign from 1950s women has caught the public’s eye.
The report reads: “State pension age is currently a subject of national interest and captures public attention both as a good news story, when looking at the improving longevity statistics, and equally as an issue of discontent, for groups that feel disadvantaged by recent policy developments. Women born in the 1950s are currently a significant group in the latter category.”
The scope of the review is only to look at future entitlements and not current arrangements.
The report says: “Men and women across all generations are set to receive very similar amounts of state pension. The discrepancy in pension outcomes for men and women instead reflects different private pension outcomes.”
It says submissions have also been received on the idea of early access to the state pension, allowing those with a high number of qualifying years to claim the full state pension before state pension age.
Other groups the report will look at further to assess the impact of state pension age changes are the disabled and ethnic minorities who are disadvantaged in the labour market so face challenges in building up pensions.
The interim report estimates by 2064/65, pensioner spending by the Government will reach 8 per cent of GDP, up from just over 6 per cent now.
Retirement Advantage pensions technical director Andrew Tully says: “Set against a backdrop of an ageing society, costs for funding the state pension are predicted to rocket…so something will need to give. Accelerating increases to the state pension age seems inevitable.”
The review’s final findings will be presented next year.