news story

16th July 2007

West MP Highlights New Pension Scandal

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Northavon MP Steve Webb has today highlighted the way in which thousands of women now approaching pension age could miss out on up to £28,000 over their retirement simply by being born a few days early. On 6th April 2010 the way that state retirement pensions are calculated will change, bringing in a much more generous system which will benefit women in particular. The new rules will help to reduce the penalties for women who have spent time out of paid work bringing up their children. But women who reach 60 on or before 5th April 2010 will not get a penny of the new money.

Now Lib Dem MP Steve Webb has obtained figures from the House of Commons library which show that some women could miss out on as much as £28,000 over the course of their retirement because the change is not being phased in more gradually. The MP has studies the case histories of over 1,000 women from across Britain and has calculated that thousands of women may face losses on this scale. He is now calling for the changes to be phased in so that women who turn 60 before 2010 can get some of the benefit.

Steve Webb said:

"The changes to the pension system in 2010 are actually very welcome. They do a lot to correct the injustices that many women have faced in state pensions. But the 'cliff-edge' between those who retire on 5th April 2010 and 6th April 2010 is totally unacceptable. It will be quite possible to have two women living next door to each other, both of whom have had identical working and family lives, but one of whom is getting £1,000 every year less in pension simply because of being born a day earlier.

"When changes are made to pension systems they are normally phased in. For example, the changes to the retirement age for women pensioners is being phased in over ten years. The same should happen in this case. I believe that women who turn sixty in the present Parliament should get some of the benefit of the new rules, instead of having a sudden cliff-edge in 2010".

Under the present system women need to have worked for 39 years to get the full basic state pension, currently £87.30 per week. Under the new rules they will only have to have contributed for 30 years to get a full pension. At present only 3 in 10 women who reach state pension age draw a full pension in their own right. Once the new rules have come in that proportion will rise to over 7 in 10.