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The wasp and the Bee

Women Against State Pension Inequality (Waspi) – oppose the ongoing rise in the state pension age for women
Women Against State Pension Inequality (Waspi) – oppose the ongoing rise in the state pension age for women Women Against State Pension Inequality (Waspi) – oppose the ongoing rise in the state pension age for women

Did you know that only female wasps have a sting?

Well the Government knows all about that right now, because a women’s pensions group - Women Against State Pension Inequality (Waspi) – are stinging them over the ongoing rise in the state pension age for women.

All women, but particularly if you were born in the 1950s or 60s, should know why Waspi are angry.

Legislation dating back to the Pensions Act of 1995 dictated that the state pension age for women rose from 60 to 63 between 2010 and 2016, and will now continue to rise.

This is in the name of equalising the state pension age for women with men, and the Department for Work and Pensions has justified the changes by saying that with increasing longevity, women retiring now will draw the state pension for 24.5 years, more than any generation before them, and several years longer than men.

The chief motivating factor for this move is clearly saving the Government money – and these measures already save £5.1 billion per year, according to the Institute for Fiscal Studies (IFS).

The IFS reckons that on average, women already affected by gradual changes in the pensions age have had their household incomes cut by £32 a week, bringing a significant rise in pensioner poverty among those 3.5 million women affected.

No wonder the Waspi’s are on the warpath.

They strongly support calls by Stephen Lloyd of the Lib Dems this month that the Government should give those impacted by this legislation a tax-free lump sum of £15,000 each, to help compensate.

Some chance of that, the cynics will say.

Now, to understand the history of this situation, we have to turn away from the wasp and, in keeping with our zippy insect theme this week, listen to the bee.

Pensions expert Steve Bee points out that for over 50 years, half of the working population had access to a company or workplace pension, to supplement the state pension when they retire. This gave them three great options in their sixties: take their state pension, take their workplace pension, and continue working to have a further stream of income.

The downside is the other half of the population who did not have access to a workplace pension, and depend entirely on the state pension.

Add to this the so-called ‘motherhood penalty’ of five or 10 years of lost pension contributions for women who took a career break to raise their children, and you see why the Waspi’s are in stinging mood.

Well, as for Mr Bee, most bees do not die after they sting (with the exception of the honey bee) so I’m sure we will enjoy further barbed comments from Steve, in the months to come.

Now back to the wasps. Just last week, Esther McVey, who obviously is a woman, was appointed as new Pensions Minister, replacing the outgoing David Gauke, who obviously is not.

There are high hopes that as a woman, Esther will have more sympathy with Waspi, and listen to their case, perhaps even soften down new legislation, moving forward.

Another former pensions minister, Steve Webb, is sceptical that Esther will be able to effect additional measures to ease the transition for Waspi women. He reckons that even if she could push new legislation through parliament, it would take at least two years – meanwhile many of the women who had the shortest notice of the new retirement age would have moved into retirement, and still lose out.

There’s also the fact that, under equality legislation, it would be hard to do something that favours women, but not men. This would increase the cost of any proposals and make Esther’s task of gaining parliamentary support much more difficult.

Plus the fact that poor old David Gauke lasted only seven months as Pensions Minister, reminding us that in recent years that job has been moving around like ‘pass the parcel’. Critics refer to the ‘revolving door’ at the pensions ministry, and call the job a ‘merry-go-round.’ After all, part of getting things done is you need a decent amount of time to do it.

If you follow this column, you’ll know the cost of running the state pension is rising. You don’t have to be a Waspi to understand that each successive cabinet is looking for ways to cut the cost of the scheme.

Women in particular need to seek financial advice from a pensions specialist who will have a feel for the issues and what the future may hold for their retirement.

It could well be a saga with a hefty sting in the tail.

::Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005 . Further information is available on the Facebook page 'Kennedy Independent Financial Advice Ltd'.