Pensions  

Labour demands state pension transitional action

Labour demands state pension transitional action

MPs have again debated the issue of state pension equalisation, with the Labour Party calling for transitional arrangements.

Labour put forward a motion calling for transitional arrangements to be put in place for those women affected by state pension equalisation.

This is the third time the issue has been debated in Parliament, with MPs voting in favour of a rethink last month but on this occasions MPs voted against the motion.

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Owen Smith, shadow work and pensions secretary, said: “There are myriad ways in which they could mitigate this problem.

“First of all they could decide to delay the pension age increase to 2020 then reaching 66 by April 2021, they could cap the maximum state pension age increase at 12 months.

“They could keep the qualifying age for pension credit on the previous timetable, helping some of the poorer women in this category.

“They could allow early access for those affected to take a reduced state pension at an earlier age during the transition, they could extend the timetable for increasing the overall state pension by 18 months to reach 66 by April 2022 and finally they could simply pay a lower state pension for a longer period throughout the pensionable age of the women affected.

“All of those things would of course have costs but all of those things are ways in which the government could act and what we need from the government is not more carping but the will to get on and do something about it.”

State pension age increases equalisation measures for men and women began to take effect in 2010, but chancellor George Osborne later revised the timetable and announced a much quicker schedule than originally planned.

The changes meant the increase to age 65 will happen between 2016 and 2018, and then both sexes’ pension age will increase to 66 by 2020 rather than by 2026 as was originally planned.

The increase of the state pension has meant some women who are weeks away from their former state pension age could find themselves many months away from their new state pension age.

Shailesh Vara, a minister in the Department for Work and Pensions, said unravelling the 2011 changes would cost £30bn while unravelling the 1995 changes would cost £77bn.

He said: “In both contexts we are talking of tens of billions of pounds and that situation is simply not sustainable.

“The reality is that people are living longer and have healthier lives and of course this is to be welcomed.

“But it does increase pressure on the state pension scheme. As a government we have a responsibility to keep it affordable and sustainable for future generations. The changes that have been made are important to making that happen.”

He said a concession had already been made which was worth more than £1bn to reduce the delay in women getting their state pension.

Mr Vara said: “The transitional arrangements that were made in 2011 benefitted a quarter of a million women who would otherwise have had a delay of up to two years.