Former pensions minister Baroness Ros Altman is calling for the government to rethink increases to the state pension age, after new research shows changes are leaving a quarter of pensioners in poverty.
Research by the Institute for Fiscal Studies shows that 100,000 more people were pushed into poverty as the state pension age rose to 66 — but only 60,000 of these were able to secure work for this period.
Altmann says that government needs to rethink this policy to take into account the near 20-year difference in healthy life expectancy between better-off and least-advantaged groups
She says the state pension age review should consider more flexibility in starting ages to account for ill-health, disability, long contribution records or caring.
“Research released by the Institute for Fiscal Studies, shows that the increase in State Pension Age to 66 has caused poverty rates for 65 year-olds to more than double, with the delay in their state pension starting age leaving one in four 65-year-olds in poverty.
“These findings are truly shocking. Even those with seriously shortened life expectancy and up to 50 years contributions to National Insurance, cannot receive a penny of State Pension early.”
She says that raising state pension age because of ‘average’ life expectancy has increased is a blunt cost-saving tool creating additional hardship for the most disadvantaged groups.
This problem is further exacerbated by the fact that it is the least well-off who rely most on the state pension, and typically with have with little or no private pensions or savings.
“It is this same group with lowest healthy lifespan, who also tend to have less private pension or other savings and have had lower earning careers. While private pensions allow early access, people in poor health – especially women – generally have less private income to supplement their National Insurance retirement benefits, leaving those who cannot keep working increasingly at risk of poverty.”
Allowing early access, even at a reduced rate, could offer a lifeline she adds. “Rather than the unrealistic reliance on out-of-work benefits, flexibility in state pension starting age is required.
“The pandemic has hit over-60s employment, and worsened many people’s health or forced them into caring for loved ones. Many may be unable to work again. The current system only has flexibility for those who are healthy and wealthy enough to keep working or wait longer than age 66. They can receive extra state pension by delaying their state date, but no allowance is made for those in the poorest health, unable to work, to draw even a reduced amount sooner. This is about social justice, as well as social support.”
She adds that these groups also being denied Pension Credit as rules have been tightened. “The lower income, least healthy sixty-somethings have been neglected by policymakers in recent years. This group, especially the women, has suffered a series of disadvantages since 2010, which includes a six-year rise in state pension age.”
Altmann says the State Pension Age review is a chance to reconsider this policy. “I hope that the ongoing review of state pension ages will recognise the injustice associated with continuing to increase the starting age for pension payments, regardless of the hardship caused to already disadvantaged groups.
“Of course it is not straightforward, but it would be more equitable to use a band of ages whereby those who need it can access their state pension (or at least pension credit) sooner, subject to minimum contribution requirements and other assessments.
“Using length of contribution history and health status, alongside chronological age, would allow more to benefit from their past National Insurance contributions.
“Under the previous state pension system, the lowest earners could continue to earn extra state pension beyond the minimum number of years for a full basic pension, but the new system stopped that.
“It would make sense to consider replacing that lost extra pension by allowing those in poorest health, or with extra-long contribution history, to receive some state pension early if needed.
“Levelling up should also mean ensuring the state pension system works more fairly for the least advantaged and I hope the Government will give this urgent consideration.”
