Women in early 60s lose £30 a week following state pension changes
Between 2010 and 2016, the state pension age for women rose from age 60 to 63. This means that 1.1 million fewer women receive the state pension, helping the government save £4.2bn in benefits, according to the Institute for Fiscal Studies (IFS).
Its report finds that affected households are receiving around £74 a week less in state pensions and other benefits.
But the IFS said that for women aged 60 to 62 who are below the current state pension age, their employment rates have increased substantially, boosting their earnings by £2.5bn – the equivalent of £44 a week. It has also boosted government revenues by £0.9bn.
However, the net effect of the higher state pension age and the rise of women working into their 60s is that household incomes for this group have actually fallen by £32 per week on average.
The IFS report also found that income poverty for women aged 60-62 has risen to 14.8%, while the rate for those just below the state pension age (57-59) is higher at 17.5%. The IFS said this is due to the working age tax and benefit system being “considerably less generous” than those over the state pension age.
The female state pension age is currently continuing to rise, reaching 65 in 2018 and (along with men) 66 in 2020. This public finance benefit will increase as the state pension age rises further.
For men, reforms to eligibility of pension credit means that single men aged 60 to 62 lose out by an average of £21 a week.
Jonathan Cribb, a senior research economist at the IFS, and an author of the report, said while increasing the state pension age is a “coherent response to the public finance challenge posed by rising longevity” it does place further pressure on household budgets.
He said: “The increased state pension age is boosting employment – and therefore earnings – of affected women but this is only partially offsetting reduced incomes from state pensions and other benefits. Since both rich and poor women are losing out by, on average, roughly similar amounts the reform increases income poverty rates among households containing a woman who has reached age 60 but has not yet reached her state pension age.
“More encouragingly, we find no evidence of increases in other measures of material deprivation. It is important the government communicates the ongoing increases in the state pension age clearly so that families can plan for their retirement as well as possible.”
A Department for Work and Pensions spokesperson, said: “The decision to equalise and increase the state pension age is both fair and sustainable for future generations and in line with continuing rises in life expectancy.
“Women retiring today can still expect to receive the state pension for over 24.5 years on average – which is more than any generation before them and several years longer than men. By 2030, more than three million women stand to gain an average of £550 extra per year as a result of the new state pension.”