More than a million women are now worse off by an average of £32 a week because of changes to the state pension, according to recent research by the Institute for Fiscal Studies1.
It found that the phased increase in the state pension age for women was saving the government billions, but having a marked effect on household incomes. Many of the affected women are worse off each week by the full amount of their previously forecast state pension.
Due to the changes, many more women have stayed in work. However, the report concludes that the extra wages have only partially offset the potential pension income they would have received. In other words, many women are working when they weren’t expecting to be and are still worse off than if they had received the state pension to which they were told they would be entitled – until the changes were initiated at relatively short notice a few years ago. This situation prompted the creation of the campaign group Women Against State Pension Inequality (WASPI).
The government increased the state pension age in response to the challenge the public finances face in paying pensions for longer as life expectancy increases. A spokesman for the Department for Work and Pensions said: “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 per year as a result of the new state pension.”
Around seven million people in their late 30s and 40s are likely to be affected by planned further rises in pension age, to 66, 67 and eventually 68, affecting men and women, so it’s particularly important that younger workers are aware of this and plan accordingly.
A huge number of people in the UK rely on the state pension to underpin their retirement income. So, if the change in pension age is likely to affect your finances, then getting some good advice as early as possible in your working life will help you get a full picture of the amount you will have to live on when you retire.
Keeping an eye on your pension planning throughout your working life can help ensure you have a financially-comfortable retirement. If you’d like some advice, get in touch.
1 Institute of Fiscal Studies, Aug 2017
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