The Trade Union Congress has called on the government to scrap its planned increases to the state pension age in a report, published today (30 August), in which it claims millions will be left worse off and poorer areas hardest hit by the reforms.
The state pension age is increasing to 66 between 2018 and 2020 and to 67 between 2026 and 2028. The TUC report states that millions of people will receive less state pension under the plans because their life expectancy is not keeping pace with the increasing state pension age.
People living in poor areas such as Corby, Manchester, Salford and Hull will receive substantially less state pension over their lifetime, according to the report.
A woman in her late 40s in Corby will have to work for two more years before retiring but will receive £12,000 less state pension during her retirement than those retiring in 2016. A man of a similar age living in Manchester will receive £7,500 less during his retirement.
The lifetime state pension for men, based on a full ‘single-tier’ state pension award, will fall from £147,000 in 2016 - when the new £140-a-week single-tier pension is introduced - to £146,000 in 2028, TUC calculations show.
The report also claims that the changes will favour richer areas where life expectancy is higher, exacerbating existing inequalities and resulting in a perversion that the most well off will be those that claim the most from the state.
TUC research shows by 2028 a woman living in East Dorset – the area of the UK with the longest post-65 life expectancy for both men and women – can expect to live nine years longer than a woman in Corby (the area with the shortest life expectancy) when they retire. This state pension divide works out at £67,000 over their lifetime, the TUC calculated.
The state pension divide for men living in East Dorset and Manchester (the area with the shortest male post-65 life expectancy) will be £53,000.
Frances O’Grady, general secretary of TUC, said: “There is already a shocking divide in life expectancies across Britain, and if current trends continue that inequality will get worse in the coming decades. The government’s pension reforms will add to the problem, with people in richer areas receiving more from the state, while those in poorer areas receive less.
“It cannot be right that people living in a wealthy area can receive tens of thousands of pounds more in state pension than someone living in a less well off part of the country, particularly as richer people are likely to have earned more during the career and have a bigger private pension too.
“The government should abandon its plan to raise the state pension in light of the new evidence on projected life expectancies. It should instead set up an independent commission to examine health inequalities and the impact on people’s expected retirement incomes.”