State pension age rise for women is delayed six months
Plans to raise the state pension age for women to 66 in 2020 will be delayed by six months, following an amendment to the Pensions Bill.
Under current plans, the state pension age for women would rise to 65 in 2018 and to 66 for both men and women in April 2020. The increase will now be delayed until October 2020, benefiting both men and women.
The plans to raise the state pension age had come under fire from critics, as it meant a small tranche of women born in 1953 and 1954 would have to wait an extra two years to receive their pension. They will now have to wait 18 months.
End the uncertainty
Commenting on the delay, welfare secretary Iain Duncan Smith says the government has "listened" to the concerns of the affected women. "We have always made clear that we would manage any change fairly and ensure any transition is as smooth as possible," he says.
Steve Webb, minister for pensions, adds that the government wanted to "end the uncertainty" for those women waiting to know their definitive state pension age. "We will be communicating with those affected so that they can properly plan for their future," he says.
In a statement, the government blames "dramatic increases in life expectancy" for the planned rise, saying it wants to ensure "no unfair burden" is placed on the next generation.
When the state pension age was set at 65 in 1926, the government adds, there were nine people of working age to every pensioner. Now there are only three, and this will fall to nearly two by the end of the century.
Critics have reacted positively to the news. Paul Green, spokesperson for Saga, says the delay is "the right thing to do", as it gives people more time to prepare for retirement.
He adds: "We are pleased that the government has listened to those who, like Saga's Dr Ros Altmann, spoke up for the unfairness faced by many women who were rightly angry that they would have little time to prepare for the change.
"The six-month delay goes some way to put right this wrong and is a victory for fairness and common sense, our only regret is that this issue was not recognised and taken seriously sooner."
Justin King, managing director of MFP Wealth Management, comments: "The government remains committed to raising the retirement age, but has clearly decided that the political cost of upsetting so many women risks being greater than the financial cost to the Treasury of delaying the changes.
"Today's announcement could cost the government as much as £1 billion, but will partially protect it from the charge that these women have unfairly lost out."
This article was taken from our sister website Money Observer