Pension changes to make the UK ‘more unequal’

15 Apr 19

Changes to the UK state pension age “exacerbate inequality” with women suffering most, a think-tank has warned.

Government plans to gradually increase the state pension age in line with growing life expectancy have been branded a “blunt instrument” by researchers from the International Longevity Centre UK.

Women with lower education are projected to lose up to 25% of their monthly pension entitlements as a result of pension reforms which will see the state pension age for both men and women rise to 66 by October 2020.

The report, out today, said that as women are more likely to undertake unpaid care work they may struggle to reconcile longer working lives with caring responsibilities.

The ILC said that the people who stand to benefit from the increased state pension age will be those who are more highly educated, more highly skilled and better paid.

Brian Beach, senior research fellow at ILC, said: “Linking the pension age to average life expectancy is a route to increasing social inequality.

“There is a need for wider approaches to encourage work in later life beyond reforms to pensions, including measures to address health and wellbeing at work, to tackle age discrimination in the workplace, and to support those juggling work and caring.”

The think-tank analysed five countries’ reforms to state pensions and found that all had done so with out creating the same level of inequality as the UK. It found that Denmark, Germany, Finland and Netherlands had all implemented reforms without intensifying social inequality to the same extent as the UK. 

An independent review from March 2017 recommended that the government legislate to increase the state pension age even further, suggesting a rise to 68 by 2037-39.

Alan Walker, University of Sheffield professor who contributed to the report, said: “Our research shows that increasing pension age in line with life expectancy is a very blunt instrument that exacerbates inequality and particularly harms older women. If other EU countries can manage the demographic transition without these negative effects why can’t we?”

A Department for Work and Pensions spokesperson said: “The government decided more than 20 years ago that it was going to make the state pension age the same for men and women as a long-overdue move towards gender equality. People are living longer so we need to raise the age at which all of us can draw a State Pension so it is sustainable now and for future generations.”

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