Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, what assessment his Department has made of the potential merits of allowing women affected by the increase in state pension age to retire early on a reduced pension; and if he will make a statement.

Many alternative options to the existing arrangements have been put forward. All of these options, including the actuarially reduced pension, suffer from substantial practical problems and would create extra cost to the taxpayer.

Even if actuarially neutral, such an option would result in losses of income tax and National Insurance payments. To give some idea of the scale of this, for individuals affected by the Pensions Act 2011, additional income tax and NI receipts from the change to State Pension age were estimated to be up to £8.3 billion.

Furthermore, the new State Pension’s key features are simplicity—giving people the clarity and confidence to save—and a value set above the minimum income guarantee standard. An actuarially reduced pension would undermine both these key features. It would complicate outcomes and, if people’s actuarially reduced state pension were below the minimum guarantee, might increase the need for means-tested support amongst pensioners.

There are also legal risks associated with offering affected women an actuarially reduced pension. The requirement to take account of equality between men and women in framing new legislation means any new transitional provisions aimed just at those women affected by recent rises to the State Pension age run the risk of legal challenge.

This matter has been comprehensively debated in Parliament and the Government has been very clear that there will be no further changes to the current arrangements or any financial redress in lieu of pensions.