Citywire for Financial Professionals
Share this page:
Stay connected:

Citywire printed articles sponsored by:

View the article online at

MPs back early access for women hit by pension age rises

Women born in the 1950s could be given access to a reduced state pension at an earlier date to make up for state pension age rises.


by Michelle McGagh on Mar 15, 2016 at 14:18

MPs back early access for women hit by pension age rises

MPs have recommended women affected by increasing retirement ages be allowed to withdraw their state pension early at a reduced rate.

The Work and Pensions Select Committee, led by Labour MP Frank Field, has concluded that women born after 1951 need help to access their state pension early after their state pension age increased twice in quick succession.

The first rise was in 1995 and saw the pension age for women increased from 60 to 65, in line with men. It was then increased from 65 to 66 under the Conservative and Liberal Democrat coalition government in 2011 as it pegged the state pension age to longevity.

The campaign group formed by women affected – known as Women Against State Pension Inequality (Waspi) – originally called on the government to return them to ‘exactly the same financial position' they would have been in if they had been born on or before 5 April 1951. However, latterly it called on the government to make ‘fair transitional arrangements for all women born on or after 6 April 1951 who have unfairly borne the burden of the increase to the state pension age’.

The committee has rejected the idea of returning women to the position they would have been in prior to the 1995 changes, calling it an ‘ill-targeted and prohibitively expensive policy’.

It also said postponing state pension age rises would be too expensive. ‘Extending the timetable for increases in the state pension age or widening eligibility for pension credit would be prohibitively expensive and could have significant unintended consequences,’ said the committee’s report.

‘We are long past the state where an ideal outcome to the necessary process of equalising and increasing the state pension age could be achieved.’

It said the government faced ‘severe fiscal constraint’ and the fact that it had maintained there would be no additional resources for a transitional arrangement to be put in place, meant the committee had to find a cost neutral solution for the Waspi women.

Smaller pension earlier

One solution is early access to the state pension at a reduced rate. ‘We are interested in an idea that was proposed of permitting early retirement, from a specified age and for a defined cohort of women, on an actuarially neutral basis,’ said the committee.

‘This arrangement…would permit women in that specified age group to choose to take a state pension sooner than scheduled in return for lower weekly payments for the duration of their retirements.’

Early access would take into account when the woman was scheduled to retire and how much they would receive over their lifetime in state pension and then adjust the weekly payment to be taken earlier.

For example, a woman born on 6 January 1955 is scheduled to draw her state pension on 6 January 2021, aged 66, qualifying for a full new state pension of £155.65 a week. If she takes her stake pension nine months earlier on 6 April 2020 then she would receive a pension of £149.58 per week in 2016/17.

Tom McPhail, head of retirement policy at Hargreaves Lansdown, said the proposal from the committee was an effective compromise.

‘The clock is ticking, with more women passing their originally expected state pension age every day, so if the government is going to act, it should do so as quickly as possible,’ he said.

‘This would be an effective compromise, allowing those women who have been affected by the increase in state pension age the option to draw on their state pension at the time they originally expected, albeit at a reduced rate.’

Plans could hit problems

However, Malcolm Mclean, pension expert at Barnett Waddingham, said allowing early access ‘isn’t as simple as people think’.

The complexity is due to the availability of pension credit, a means-tested state pension top up that is paid to those whose state pension is less than £151.20 a week (or £230.85 for a couple).

‘For the Waspi women the government is not going to let them draw the pension early [at a reduced rate] and then top it back up with pension credit,’ he said, adding that allowing the women to claim pension credit would bump up the benefits bill. ‘It goes against the principles of means-tested benefits.’

Mclean is also concerned about the rate at which the state pension would be reduced if it was taken early and that the women would be pushed into poverty if unable to claim the means-tested benefits.

Currently those who defer taking their state pension are rewarded with a 5.8% increase in their weekly payments for each year they don’t draw the pension.

‘The reduction [for taking a pension early] will be savage,’ said Mclean. ‘It’s the converse of what happens if you delay taking your state pension now, you get a 5.8% per annum increase. The other way – a 5.8% reduction – would mean a woman taking her state pension at 62, three years early would be looking at a 17% reduction.’

Mclean is not the only person with doubts about early access. Citywire Money's sister trade publication New Model Adviser® reported that the Department for Work and Pensions (DWP) was concerned there would still be a cost to early access.

In analysis obtained through a Freedom of Information request, the DWP said: 'While this option has not been costed, even if a lower pension rate was actuarially calculated (on state pension received), this option would impact on other state expenditure and receipts.' 

6 comments so far. Why not have your say?

Michael Stevens

Mar 15, 2016 at 17:29

Ladies should have known about the age increase and this gives them an extra year or two to plan.

The age must increase by one year for every five, so that 70 is obtained by 2040.

When the pension was introduced the age was 70 !

report this

Simple Simon

Mar 19, 2016 at 16:29

The problem isn't equality of retirement age - it's the (lack of) fair transition arrangements. Lady A born Dec 1953 has had her full pension for some time now - Lady B born 6 months later won't get hers till nearly 2020.

report this

And then my hat fell off

Apr 21, 2016 at 10:33

Sentiment is true, Simon, but ladies born in 1953 mostly don't have their pensions yet either. My lovely mum is April 1953 and isn't there yet (July). Her friends born in 1952 have already had a couple of years though.

report this


Apr 21, 2016 at 18:38

My wife's pension age went from 60 to 66 and she still has to pay NI contributions even though she has her full number of qualifying years paid up already. This is completely unjust but what do you expect from people who can vote for their own payrises and pension benefit improvements? We are most certainly not all in this together.

report this


Apr 22, 2016 at 12:57

A rise in state pension age has never happened before in the history of state pensions. For 50s women to bear the brunt of a 6 year hike over a period of 11 years is intolerable and how anyone can expect women not to take umbrage at this is ridiculous. Now the government complain at how much the transitional measures will cost but forget that it was our money in the first place that they misappropriated. One minute this is about equality and then its about life expectancy - both can not be true, otherwise men would retire earlier. Please lets say what it really is all amount, which is reducing government debt. If it was about equality it should have gone down to 60 for men and then risen gradually by 1 year per say 5 years.

report this

Michael Stevens

Apr 22, 2016 at 17:10

/The state retirement age was 70 for all, when it was introduced in about 1907

Just be sensible ladies, you wish for equality and you have had over 20 years to think about the change in the 1985 pensions act.

Just get real. .

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

Sponsored By:

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add to your safe senders list so we don't get junked.

Latest from Investment Basics

See all headlines


Barnett eyes revival and 'refines' unquoted portfolio

by Daniel Grote on May 23, 2018 at 16:09

Sorry, this link is not
quite ready yet