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Questions about women’s pension reforms

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MoneyThe Work and Pensions Select Committee has begun its pre-legislative scrutiny of this government’s pension reforms.

The committee met on 27 February to hear evidence from experts about plans to introduce a flat-rate state pension of £144 a week from April 2017.

Ahead of the meeting, many women asked the committee to address the fact that they will miss out on the more generous flat-rate pension as they are due to retire before April 2017.

As Women’s Views on News recently reported, this is a further blow for the women who have been forced to work for longer because the government is gradually increasing the female retirement age.

Jill Klee, who wrote to the Committee and is one of the women affected, labelled the situation an ‘exceptional and arbitrary discrimination’ that will have life-long financial implications.

Like many at the meeting, pensions expert Baroness Hollis of Heigham responded sympathetically.

She said: “There are ways, I think, in which we could, absolutely rightly, help these women who have been hit twice over – not just once, but twice over.

“I do think it is not decent that we should leave them exposed in this way.”

Various methods were suggested to rectify the situation, including allowing the women to join the new system and increasing their pension if they were on course to receive a higher amount.

Dr Ros Altmann, a pensions expert, highlighted the fact that many women had expected to be on the new system and would be if the government introduced it in April 2016 as originally planned.

“The implication was given that, although they will have to accept a second increase in their state pension age beyond the 1995 changes at very short notice, they would at least get the single-tier state pension when it came in,” she explained.

Altmann also warned the Committee about the possibility of further delays.

She said: “Although at the moment we are talking a certain number of people, the number could increase significantly if the introduction date is delayed.”

Sally West, a strategy adviser for Age UK, expressed her concern about plans to increase the number of National Insurance contributions that recipients need to receive the state pension in full.

She pointed out that this may prove difficult for women who work part-time because National Insurance contributions are not granted when people earn below the Lower Earnings Limit.

In response, Altmann said that the government should find “some way of crediting people who are still working and earning, but below the National Insurance limit”.

Attendees did praise the significant change made so that the number of years spent raising a family will count towards the state pension.

This will enable more women to get the state pension in their own right instead of relying on their husband’s National Insurance contributions.

Hollis said: “Women’s working lives are infinitely more volatile than men’s, and, as a result, it gives them some sort of security at, I hope, a decent enough level when they retire.”

However, everyone agreed that this change must be exercised with caution.

Hollis stressed that “adequate and appropriate credits and buy-backs” must be available to women, while West said it is “really important” to ensure that women who planned to use their husband’s contributions do not “suddenly find that they are left without a pension at all”.

Dame Anne Begg, the chair of the Committee, added that “there is a big education job to be done with younger women” to prevent such scenarios and enable women to plan better for the future.

The Committee will make recommendations to the government about the proposed pension reforms before a finalised bill is issued.

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