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Webb defends pension reform plans at select committee

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Pensions minister Steve Webb says the Government does not intend to slow the increase in the state pension age because to do so would be too expensive.

Giving evidence to the Work and Pension select committee this morning, Webb (pictured) said the change was necessary because of the “staggering” increase in longevity.

The pensions bill will see men and women’s state pension age equalised at 65 in 2018, rising to 66 by April 2020. Labour planned for equalisation by 2020, with a rise to 66 by 2026.

Webb said: “The alternative is waiting until 2020 to make the change which would save £20bn instead of £30bn, so that extra £10bn needs to be found from somewhere.

“Between 2004 and 2008, men and women’s life expectancy rose by a year and it is as if we are constantly chasing our tail on this.”

W&PSC chairman Dame Anne Begg raised concerns that the changes fall “disproportionately” on women. She said for 33,000 women the increase will mean getting a state pension two years later, with very little time to prepare for the change.

Webb said: “I do not take this decision lightly but exempting those women would cost more than £300m and if we exempt them, people just outside this group would start asking: ’what about me?’.”

Webb restated that people losing out because of the changes would be able to claim other benefits.

He said: “A good proportion of women affected by the change will still be working, building up more pension provision and for those that are not, working age benefits will take the place of pension benefits.

“None of these working age benefits are perfect, none of them are ideal but it is not all or nothing.”

Shadow pensions minister Rachel Reeves has previously said that telling women to go on the dole “is an absolute insult”.

Webb defended the move from RPI to CPI for uprating pensions, saying CPI is a “better fit” with pensioners’ living costs.

He said the universal pension the Government is currently working on will act as a known base for people to build on and Nest will help people do that by bringing about a “cultural change”.

Total employer, employee and taxpayer contributions to Nest will be 8 per cent and the committee suggested this might be too low.

Webb said: “People forget that some people will be auto-enrolled into schemes above the minimum. If people are not in schemes it does not necessarily mean their employer does not have a scheme. Our language will be that 8 per cent is the floor, not the norm.”

He added that if contributions are too high people could opt out and said there is “little evidence” to suggest employers will level down.

Begg criticised the fact the DWP website was not updated after the increase in state pension age was announced. Webb accepted it could have been clearer and added the changes are now included on the site.

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. I agree that the State pension is far too complicated, my pension is actually made up of 6 pieces. Finding that I could not afford to retire at 60 on the State Pension I worked another 5 years before claiming. It the took the pensions office nearly 4 months to add the pieces together and even then the wrong tax was deducted. I then had to wait about 15 months for the tax office to agree to refund the tax as even they did not seem to understand the system. Good job I still have all my faculties. Withv the retirement age going up all the time, pensioners need to be aware of these problems.

  2. Did Dame Anne Begg not read the ECJ judgement on sex discrimination?

    She’s probably living on the same planet as Steve Webb who thinks that CPI is a better fit with pensioners’ living costs!

  3. Does anyone know why the pension age for women was reduced from 65 to 60? This happened in 1942. Too long ago for anyone to remember, but maybe someone could do a little bit of research to find out why it was done.

  4. I dont believe that anybody thinks that CPI is a better fit including the governments own staticians.

    From a personal point of view I have found that as I get older everything costs me more. I am no longer able to simply get a ladder out to fix a gutter and have to rely on trademen more and more for basic maintenance of my house which in the past I would not have thought twice about tackling. Changing the update of my ocupational pension to CPI is little short of robbery. I earned my pension and the way it is updated was part of this. The government does things like this to pensioners and then wonders why the young dont save for old age. Why should they when the government will only come along at some later date and steal their pension income.

  5. Steve (9 March 2011) is 100% right. The government’s argument that this does not affect accrued rights is simply dishonest. The BT situation makes it very clear – BT has been enabled by this Government to take £3bn from pensioners and hand it over to shareholders. This is Robin Hood in reverse, usually known as theft.

  6. How can it be a universal pension if those of pensionable age at this time are excluded. Hopefully the EU will over-rule this rediculous discrimination against a particular age group.

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