The poverty rate among women aged 60–62 increased by 6.4 percentage points under the new state pension age, according to an academic paper.
The report Can't wait to get my pension: the effect of raising the female early retirement age on income, poverty and deprivation, to be published in the Cambridge Journal of Pension Economics & Finance in July, found household incomes of this group of women were reduced by £32 per week on average after an increase in employment income partially offset larger falls.
Jonathan Cribb and Carl Emmerson - senior research economist and deputy director of the Institute for Fiscal Studies, respectively – estimated the impact of increasing the female state pension age on the incomes of women aged 60–62.
Women born between April 6, 1950 and April 5, 1953 saw their state pension age changed from 60 to between 60 and 63 by the 1995 Act, which became effective gradually between 2010 and 2016.
Looking at the period April 2010 and March 2016, Mr Cribb and Mr Emmerson analysed data from the UK's Family Resources Survey.
They concluded that the increase in poverty rates was greater among certain groups such as singles, renters, and those with fewer years of formal education.
However, the authors didn’t find any evidence that the increase in income poverty persisted once the women reached the state pension age, suggesting it was the delay that caused the additional hardship.
Mr Cribb and Mr Emmerson also didn’t find any evidence of more women being deprived of important material items.
This potentially suggests that many affected families have cut back on their spending to avoid increased levels of deprivation, they noted.
After accounting for behavioural change, the authors estimated the public finances were bolstered by £5.1bn (0.3 per cent of GDP), of which £4.2bn came from reduced benefit spending (net of tax, where applicable) and £0.9bn from increased direct tax receipts elsewhere.
This implies that the reduction in benefit spending from the cuts to state pension spending was only partially offset by higher benefit spending elsewhere, while on the tax side the reduction in income tax from state pension income is more than offset through increased taxes on private incomes.
FTAdviser reported yesterday (June 24) that the number of women aged 60 and over taking out-of-work benefits hiked 183 per cent in the past five years.
Plans to increase the state pension age were first announced in the Pension Act 1995 but these changes were accelerated as part of the Pension Act 2011.
Campaign groups The Women Against State Pension Inequality and Backto60 have claimed these changes were implemented unfairly, with little or no personal notice.
The groups, which are calling for compensation for those affected, have also claimed that changes were implemented faster than promised with the 2011 Pension Act and left women with no time to make alternative plans, leading to devastating consequences.
However, the government has stated that reversing the hike in women's state pension age back to 60 would cost the public purse more than £180bn.