Coalition government plans to save £38 billion by bringing forward the age at which workers can claim a state pension will hit women and the most disadvantaged in society hardest, a charity has warned.
A new Pensions Bill, which was introduced into Parliament yesterday, will see the State Pension Age for women rise from 60 to 65 by 2018 rather than by 2020 as originally promised. It will also go up to 66 for both sexes by 2020, six years earlier than planned by the previous government. There are currently no plans to accelerate the State Pension Age to 67 by 2036 and 68 by 2046, but further proposals in this area are expected to appear later this year.
Some five million people will be affected by the move, which is expected to save the government £38 billion between 2016 and 2026. Some £8 million is predicted to come from taxation as people continue to work and £30 billion in less expenditure on pensions and benefits.
Michelle Mitchell, director of charity Age UK, said: “By pushing ahead with these plans, the government is breaking the promise it made in the coalition agreement not to start increasing State Pension Age to 66 for women by 2020.”
Women will see the age at which they can claim their state pension rise by six years between 2010 and 2020 compared with only one year for men, which means they will be hit hard. But it is the poorest in society who will be affected most by the changes as they are generally more reliant on such income and had a lower life expectancy, she warned.
Moreover, the Bill failed to address “fundamental problems” with the current “over-complicated and measly” system. As a result, Mitchell called for further reform to ensure a higher state pension and simpler system, with the aim of reducing pensioner poverty rates that continued to be “shamefully high”.
Concerns have also been raised by the government’s decision to press ahead with plans to phase out the Default Retirement Age by this April and scrap it by October.
John Cridland, director general designate of employer lobby group the CBI warned that the impact on employers, and especially smaller ones, would be considerable. “There is not enough clarity for employers on how to deal with difficult questions on performance. Less than three months is not enough time for businesses to put in place new procedures. The outcome will be more unpleasant and costly legal action,” he said.