PensionsAug 2 2017

Million women poorer due to government pension changes

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Million women poorer due to government pension changes
ByStephanie Hawthorne

Household incomes have fallen significantly due to changes to the state pension age and pushed income poverty among 60 to 62 year old women up sharply, according to latest research by an influential think tank.

Data compiled by the Institute for Fiscal Studies in its report, 'Can’t wait to get my pension: the effect of raising the female state pension age on income, poverty and deprivation', found household incomes for women in this age group have fallen by around £32 per week on average.

The reduction is similar in cash terms for richer and poorer households, meaning that while the average drop in proportional terms is 12 per cent, the decline is significantly larger, on average, for low income households, at 21 per cent, than for high income households, at 4 per cent.

Between 2010 and 2016, the state pension age for women rose from age 60 to 63.

The result is that 1.1 million fewer women are receiving a state pension and government is providing £4.2bn less through state pensions and other benefits.

This means affected households are receiving about £74 a week less in state pensions and other state benefits as a result of this change.

The falls in household incomes caused by the reform have pushed income poverty among 60 to 62 year old women up sharply.

It is now at 21.2 per cent, compared to 14.8 per cent before the reforms.

Currently the IFS  found no evidence of any change in measures of material deprivation - that is people saying that they cannot afford a range of important items - which might suggest, despite lower incomes, so far families have generally managed to avoid higher levels of deprivation by smoothing their spending over time.

For women aged 60 to 62, who are now under the state pension age, the reform has also increased employment rates substantially, boosting the gross earnings of these women by £2.5bn in total.

Across all 60 to 62 year old women (including those not in paid work) this is equivalent to an average of £44 per week.

This – and the fact that employee national insurance contributions are paid up to the now higher state pension age – has boosted government revenues by £0.9bn.

Rates of income poverty among women are greater for those just below the state pension age than for those just above it.

Before the reform income poverty among 57-59 year old women was 17.5 per cent while that for 60-62 year old women was 14.8 per cent.