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Webb: 'we made a bad decision' on state pension age rises

Webb: 'we made a bad decision' on state pension age rises

The former pensions minister Steve Webb has revealed the government 'made a bad decision' over state pension age (SPA) rise plans when they were first put forward which resulted in crisis talks with the prime minister over the issue.

Under plans set out in 2010 women’s SPA would increase more quickly than before to 65. It would hit 65 by 2018 and both men and women would have a retirement age of 66 by 2020.

Speaking to the Institute of Government, an independent body, as part its 'ministers reflect' series, Webb admitted that his department had not been properly briefed on the impact of the changes.

'There was one very early decision that we took about state pension ages, which we would have done differently if we’d been properly briefed, and we weren’t,' he said.

'Most of the time I had very good civil service support, very good people, but [on this occasion it] was very poor. So we had to make a difficult decision; we were given a briefing as to the implications of different choices. We made a choice, and the implications of what we were doing suddenly, about two or three months later, it became clear that they were very different from what we thought.'

'So basically we made a bad decision. We realised too late. It had just gone too far by then.'

The original proposal meant 500,000 women would have to wait an extra year for their state pension; 300,000 women would have to wait for 18 months or more; and 30,000 would have to wait for an extra two years.

According to Webb it had not been made clear to him before the original draft of the Pensions Act 2011 was published that some people would have to wait an extra two years.

Ros Altmann, who was then an independent pensions expert but is now pensions minister herself, campaigned for the reform to be changed.

The government agreed to a concession delaying SPA rises by six months, at a cost of £1 billion to the government.

Webb said the issue was so critical he took it straight to the top of government, resulting in a conference involving Webb, the prime minister and the chancellor.

'And so that’s a decision that we got wrong, and in the end I had to go to 10 Downing Street, sit around opposite the chancellor and the prime minister trying to get billions of pounds back. So this was a measure to save 30 billion quid over how many years, and we wanted 10% of that back to soften the blow, and we got £1 billion back in the end, and a billion quid is a serious amount of money.'

Webb also admitted that he was 'guilty' for describing the new flat-rate state pension in too simple terms when plans were announced under the coalition government, but insisted he had not willingly deceived the public.

In July it was revealed that just one in three would be eligible for the full flat-rate amount of £155.65 per week in the system's first 10 years.

'So I was guilty I think of selling it [...] I described it in a very simple language, and actually if when we’d been thinking about the policy, we’d been thinking about how we explain it, I wouldn’t have been quite as black and white as I was, from which we then had to row back,' Webb said.

'It wasn’t that we were trying to deceive people, but it is just what pensions are like – as soon as you go into a tier of detail below the headline, you’ve lost everybody.'

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