State Pension Age (Women)

Yasmin Qureshi Excerpts

Wednesday 11th May 2011 Westminster Hall

[Julie Elliott (Sunderland Central) (Lab)]

It is a pleasure, Mr Weir, to speak under your chairmanship this morning. I warmly congratulate my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) on securing this debate and on her excellent introduction. I am pleased that so many Members are here to participate; this is an important subject, and many will be affected.

I start by saying how many of my constituents in Sunderland Central have contacted me about this issue. Over the past couple of months, I have been overwhelmed by the number of people contacting me who are worried and anxious, and oppose the Government’s plans to speed up the equalisation of the state pension age. Many have written giving their own stories of what they are about to lose.

Average life expectancy in this country is increasing. That is a good thing, but it is why reforms to the current pension system are necessary. No one disagrees with that. We live in an ageing society, and the pension age needs to rise to ensure that people’s retirements remain financially secure and enjoyable. However, I cannot support the changes that the Government propose, as speeding up the timetable for equalising the state pension age in that manner is unfair to my constituents.

[Yasmin Qureshi (Bolton South East) (Lab)]

Does my hon. Friend agree that the golden principle running through our legal system is that legislation should not be made that results in offenders not knowing what sentence they are going to get? In a similar way, in civil law those who enter into a contract, such as in employment, should know exactly what the terms and conditions are. Retrospectively to change those terms and conditions is manifestly legally and morally wrong.

[Julie Elliott]

I totally agree with my hon. Friend. It is that feeling of injustice—almost that people have been conned; they thought that they were contributing to one thing, but were getting something else—that is so stark in these proposals.

I shall give a few examples to explain the problems that the proposed changes will bring to the lives of many women in my constituency—and, I am sure, across the country. The first is of a woman who has worked, planned and saved, but will still be caught out. She has done everything that people are being told to do. She has worked from the age of 16, with a couple of intermissions to have children, although in those days maternity provisions were not as good as they are now.

This woman has three small private pensions from her various places of work; in some ways, she is in a good position compared with many, although two of those pensions will be deferred until she is 60. A couple of years ago, her parents became ill. She did all the calculations; she could release the private pension from her current employment, and she had some savings, so she decided that she could manage with her deferred pensions being paid at 60 and her state pension not being paid until she was 63. She did all that, and left work a couple of years ago.

One could argue that my constituent has saved the state money by looking after her ailing parents. However, she now finds that her state pension will be delayed. She has done everything right—she has worked, saved and contributed—but is being penalised, and will somehow have to find the shortfall. She is incredibly worried about that. She has never been well paid, but has been cautious in her financial planning.

Another constituent who contacted me is set to lose more than £7,500 of the state pension, something that she has worked hard for over many years. She is now required to work a further 74 weeks. She understandably feels let down by the Government. In her letter, she said that she has worked extremely hard all her life, yet her retirement age seems consistently to move further away. Frankly, the changes to her pension have left her feeling robbed. She is not in good health, and wonders whether she will be fit enough to work those extra years. She may have to go on to benefit, something that she has never wanted.

The third of my constituents to write to me says that she had planned to work until she was 60. She began saving, and started contributing towards her pension when she was 18—38 years ago. She has worked hard and contributed to society; she paid her taxes and her national insurance contributions. At the age of 56, she was looking forward to a relaxed and financially secure retirement. The Government’s plans mean that she will now have to work until she is 66, six years longer than she expected. Her health is failing due to the stress of her job, and she is not financially prepared for the change. She wonders how she is meant to prepare for it at such short notice, and why the Government have let her down in this way. I am sure that she also wonders why the Government are going back on their promise in the coalition agreement.

A common theme runs through the letters that I have received from constituents. They do not disagree about the state pension age rising; they recognise that increasing life expectancy makes that logical. However, they say that moving the goalposts at such short notice is creating serious financial harm and causing real worries. As a result, some are considering working beyond their state pension age. However, that should be a choice; it should not be forced on them. Retirement, and especially the age at which people decide to retire, should be about choice, but choice has been stripped from those affected by these changes.

In my constituency of Sunderland Central, 1,100 women aged between 56 and 57 are among the 33,000 women whose state pension will be delayed by two years. I wrote to the Minister, asking about his plans for the state pension age. In reply, he said:

“While overall there are some aspects of the change that will affect women more strongly than men, we consider the effect is not disproportionate”.

I disagree with him. No man will have to wait longer than a year, but 500,000 women will. If that is not disproportionate, what is?

When it comes to the state pension, women are already at a disadvantage. The median pension saving of a 56-year-old woman is almost six times lower than for a man of the same age. Women will have decided to have children and work part-time to raise families. That is a valid decision and one for which they should not be punished—indeed, they should be praised. However, under these proposals such women do not have enough time to adjust their financial plans for retirement. Many have already decreased their hours in preparation for retirement, and some will have done so because of ill health.

Retirement is an opportunity for those who have contributed all that they can to society to rest with peace of mind, knowing that their contributions will be recognised and that they will be adequately provided for. However, I worry about the long-term costs for these women. I suspect that there will significant hardship, with anxiety and stress about financial matters. I also worry about the ill health that results from working to an older age.

The Turner Commission recommended 15 years of preparation before such changes are implemented. I would be interested to know why the Minister disregarded that and opted for far fewer years. Current plans will result in very different outcomes for women of similar ages. I know that the line has to be drawn somewhere, but deciding a person’s pension eligibility by their birth date suggests that the entire reform is being introduced too swiftly. The Government should stick to the original timetable, with equalisation at 65 in 2020, and not increase the state pension age to 66 until after that.

Once again, I congratulate my hon. Friend the Member for Erith and Thamesmead on securing such an important debate. I look forward to the Minister’s response.

--- Later in debate ---

[Rachel Reeves]

We will hear from the Minister in a moment, but we heard the arguments being rehearsed when the Pensions Bill was debated in the House of Lords. We are told that we first need to reduce the budget deficit but, as other Members have said, these provisions will not change that deficit in this Parliament and if the Government’s plans to eliminate the structural deficit in this Parliament come true, I do not see why changes on this scale will be needed in the next Parliament.

The Government’s other claim is about longevity, but longevity is not especially increasing for women aged 57, so why are we particularly targeting women of that age? If the Government wanted to look more broadly at longevity and increases in the state pension age, they would, I think, get cross-party support for that. It is particularly unfair and disproportionate to harm a group of women who have five years to prepare for the changes and have so little chance of making up the difference in lost income, which is what the women who have been writing to all of us are saying.

My final quote from the Minister is:

“a pension promise made should be a pension promise kept.”

He and his colleagues should heed that, and we are not alone in our thinking. Age UK, the unions, Saga, The Guardian and the Daily Mail are all arguing for the Government to think again, and Age UK has organised a mass lobby of Parliament for a week today.

[Yasmin Qureshi]

The change to the pension provision was not in the coalition agreement and will do nothing to reduce the deficit by 2015. It will, however, as my hon. Friend has said, hit 5 million hard-working people, 500,000 of whom are women who will suffer particularly harshly. Does she agree that this is another example of hard-hearted Tory policies hitting the ordinary working person?

[Rachel Reeves]

I agree, but I would also go a bit further: not only was the change not in the coalition agreement—reached just a year ago—but it contradicts it. The agreement states that the state pension age for women will not start to rise to 66 before 2020, but under these proposals that rise will start in 2018. For that simple reason, coalition MPs from both the Liberal Democrat and the Conservative parties are under no obligation to support the changes.

The lobby of Parliament organised by Age UK for a week today will give a voice to those who are adversely and unfairly affected, and I hope that the Minister will spare some time to meet some of the women who are hit by the changes and are coming down to Westminster to oppose them.

The Bill has had its First Reading in the Commons and we are awaiting its Second Reading. I once again urge the Minister to honour the coalition agreement to which he signed up, to admit that the impact of the proposals is unacceptable, and to revise the timetable so that no one has their pension delayed by more than a year and trust can be restored in the pension system, a system which the Minister, in his heart, believes is so important.