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4 March 2016

When it comes to pension discrimination, it is likely that the worst is yet to come

Don’t assume that discrimination does not hit at both ends of working life or that the gender pay gap does not translate seamlessly into a gender pension gap.

By Helen Walmsley-Johnson

I’ve noticed something about successive governments and that is that whatever they inherit – the good, the bad or the indifferent – they feel compelled to fiddle with it. In the same way that a middle manager with a vague job description will justify his (or her) place on the payroll by “discovering” things that need fixing so too will a government find reasons to tinker, whether it’s health, education or the justice system. The phrase “if it ain’t broke, don’t fix it” means nothing to the likes of Hunt, Gove, IDS et al, just as it meant nothing to their predecessors. Having said that, I agree that the way the state pension is administered does need a rethink. I believe the system is, if not broken, at least wobbling along on three wheels and a door handle.

On 24 February a House of Commons Opposition Day debate took place on Transitional State Pension Arrangements for Women. This is, I think, the fifth debate on the subject (if you’re counting) and after a gruelling few hours, the motion was voted Ayes 265 and Noes 289, meaning that if you’re a woman born in the 1950s don’t hold your breath for help arriving any time soon. It was a dispiriting afternoon summed up by one of the Government’s own MPs, Paul Maynard, who said, “I am embarrassed to be in the Chamber today, because this debate has shamed us all.” Mr Maynard gets a rare “hear hear” from me. Having followed the progress of the “transitional arrangements” debate over the last few months I have to say this last one left my spirits pancaked. It’s the contempt that did for me. That and the refusal to listen or give any credibility to the arguments being raised and this despite so many Conservative MPs speaking out against their own party on the subject. Among the list of possible remedies put forward there was this: “The Government could allow those affected to take a reduced state pension at an earlier age during the transition”. Brilliant. A low-cost solution to an expensive problem and one I’d have thought well worth considering following this week’s news of an independent review, chaired by John Cridland (former director general of the CBI), to ascertain whether the state pension age should continue to rise in accordance with life expectancy. The report is due to be delivered to the Chancellor by May 2017.

My first uncharitable thought of “I told you so” was directed towards the social media trolls who tell me, “you wanted equality, you’ve got it” in the mistaken belief that their own pensions are safe. I’d also refer them to something Mark Durkan MP said in that Opposition debate when he spoke of “moral hazard” and the precedent the Government were setting for unfair dealing. There has been nothing “fair” about the way in which the two rapid-fire increases to the women’s state pension age have been handled.

Nonetheless, clearly something has to give and in this respect the 1950s women currently battling for their rights might very well be seen as the canaries in a coalmine. There is little point extending our working lives if age discrimination or ill health means we are not able to work, or in saying that if you start work at 16 you might be able to retire earlier (your mid-70s by 2060). Don’t assume that discrimination does not hit at both ends of working life or that the gender pay gap does not translate seamlessly into a gender pension gap. Nor is life expectancy a rule by which state pension age can be governed. Life is not that simple. How long we might live varies enormously across the United Kingdom depending on location, health and income amongst other things. Caroline Abrahams, a director of Age UK, believes it is essential that further increases to the state pension age should not be based on life expectancy alone. She is right.

The (still mysteriously absent) Minister of State for Pensions, Ros Altmann, issued a typically bland statement, “As our society changes, it is only right that we continue to review state pension ages and take into account the relevant factors to make sure that the state pension is sustainable and affordable for future generations.” Which tells us precisely nothing, although her former colleague at Saga, Paul Green, has suggested that she might wish to avoid “past mistakes”. However, she is broadly right in what she says although “relevant factors’ gives me the chills.

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It may be that the suggestion of phased retirement and pension as a low-cost solution will come to be considered more seriously, that age discrimination in employment will finally get knocked on the head or that we work in a different way and perhaps share jobs or take on a portfolio approach to working life. Whatever happens there cannot, this time, be a one-size-fits-all solution but individually tailored arrangements for each person depending on their own specific circumstances. As a bonus, administering that little lot could keep currently unemployed middle-aged women gainfully employed for quite some time.

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Finally, and to return to Mark Durkan’s “moral hazard”, I’m very much afraid we will see evidence of this in a drive-by raid on private pensions by the Chancellor in his imminent budget. Beware the Ides of March.