The Institute for Fiscal Studies (IFS) has released its findings after studying the implications of government changes to the state pension age.
They calculate that more than a million women are worse off by an average of £32 a week with poor households suffering the most after the pension age for women was increased from 60 to 63 between 2010 and 2016 (1).
At the heart of the IFS calculation is the balance between increased earnings from additional years of work offset against reduced incomes from state pensions and other benefits. The net effect according to the IFS was that incomes for women aged 60 to 62 had fallen on average by £32 per week. With all households losing out by similar amounts the proportional impact was more severe for poorer households (2).
“The falls in household incomes caused by the reform have pushed income poverty among 60- to 62-year-old women up sharply,” said the IFS analysis, funded by the Joseph Rowntree Foundation and the Economic and Social Research Council (2).
On the other side there has been a considerable financial boost to the government from the changes with 1.1 million fewer women receiving a state pension. This meant the government is providing £4.2bn less through state pensions and other benefits (4).
In total The IFS calculate the boost to the public purse at £5.1bn a year thanks to the rise in the state pension age as well as reduced state benefits, increased NI contributions and raised employment (2). With public sector debt currently standing at £1.75 trillion the government said the policy was “fair and sustainable” and matched continuing rises in life expectancy (1).
The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.