Labour has announced plans to let some women take their state pension up to two years early. How would the plan work and is it a good idea?
What’s on offer?
Labour announced at its conference that, if it was in government, it would allow some women to take their state pension up to two years early, at 64. I don’t have more information about exactly how the proposal would work. Labour did give some sections of the media more information last night, but in the speech at the Labour Party conference today, Debbie Abraham, who’s the Shadow Secretary of State for Work and Pensions, gave very little away.
Here’s the relevant part of what she said:
“We promised in our manifesto to provide pension credit and additional support to the two and a half million 1950s women still waiting to retire.
As a starter, I can announce today that a Labour Government in power now, would allow these women to retire up to two years early.”
What the media were told yesterday is that this policy would be cost neutral. That means that women who take their pension early would get a lower pension for the rest of their lives. I’ve not been able to confirm whether that’s still part of Labour’s plan.
If the idea that is it cost neutral is still on the cards, I don’t know how the maths would work out, but here are a couple of examples:
If you assume a woman is due to receive her state pension at 66 and would qualify for the full flat rate amount of £159.55 (in tax year 2017 – 18), that works out at £8,2966 a year. If she was allowed to take her state pension two years early, she’d get an extra £16,593.32 over two years.
Using the latest life expectancy tables, a woman in the UK can expect to live for another 20.9 years at the age of 65, on average. So, £16,593 divided by 20.9 is £793.93. This is the amount by which your state pension would be reduced each year of your retirement.
That works out at £15.26 a week. This would mean that if you qualified for the full flat rate state pension, you’d get £144.29 a week. This is below the level for pension credit (guarantee element), but I’m not sure if you would be able to claim this on top. I would have thought not.
What do WASPI women think?
The official WASPI campaign has put out a comprehensive statement. Here it is:
“We are disappointed and concerned by the announcement made by the Shadow Secretary of State for Work and Pensions at Labour Party Conference this afternoon and the details provided in the media in advance of it this morning.
This morning it was reported that the proposal due to be announced would only apply to some WASPI women. This is no better than the actuarial reduced pension suggested some time ago and rejected by the WASPI Campaign because it pushes women into pensioner poverty.
We released a short statement earlier today explaining how concerned we were with this suggested proposal which would include elements of means testing and does not include any level of compensation for those who have lost such significant amounts of their State Pension.
We have since met with many Labour MPs and campaign supporters at the conference to raise our concerns quickly and directly. While the proposal reported this morning was very disappointing we have taken comfort that Labour MPs and our supporters close to the Labour Party shared our concerns. The announcement has come as a shock to many of those MPs, some of whom sit in the Shadow Cabinet.
The speech that has followed this afternoon provided less information that initially reported. We hope this is because those who support our campaign raised their concerns immediately with the leadership of the Labour Party.
Although this means we remain unclear as to what the Labour Party position is, we are grateful for their pledge during the General Election to work directly with WASPI women to identify and deliver the transitional arrangements WASPI women need. We will continue to work with Labour MPs to find a solution which properly recognises the injustice for WASPI women and does not pit us against each other.”
I mentioned the announcement this morning on SavvyWoman’s Facebook page, and the overwhelming majority of comments have been negative.
Do feel free to leave your thoughts on this policy announcement – negative or positive – on SavvyWoman’s Facebook page.
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