State Pension Age — House of Commons, 2018-02-08
Topic: Labor
Guy Thomas Opperman (Conservative, Centre-right): With permission, Mr Speaker, I will make a statement following the Opposition day debate on state pension age The decision to equalise the state pension age for men and women dates back to 1995 and addresses a long-standing inequality between men and women’s state pension age. This change was part of a wider social trend towards gender equality, but was also a decision, partly as a result of European and equality legal cases, relating to occupational pension provision During the Blair and Brown years, the then Government decided that a state pension age fixed at 65 was no longer affordable or sustainable. The Pensions Act 2007 introduced an increase in state pension age to ages 66, 67 and 68. The coalition Government brought in further changes under the Pensions Act 2011, which accelerated the equalisation of women’s state pension age and brought forward the increase in men and women’s state pension age to 66 by 2020. During the passage of this Act, Parliament considered a range of alternative options, resulting in a £1.1 billion concession that capped the maximum increase any woman would see in her state pension age at 18 months, relative to the Pensions Act 1995 timetable Many Members raised the issue of communications in the November debate. Since 1995, the Government have gone to significant lengths to communicate these changes. People were notified with leaflets, an advertising campaign was carried out and later individual letters were posted out. Those affected by the 1995 Act changes were sent letters informing them of the change to their state pension age between 2009 and 2011, with letters sent to 1.2 million women. Those affected by the Pensions Act 2011 changes were sent letters between January 2012 and November 2013, which involved sending over 5 million letters with an accompanying leaflet.[Official Report, 17 December 2018, Vol. 651, c. 3MC.] Life expectancy and state spending are what have driven these changes. Society has changed in countless ways since the 1950s and life expectancy is no exception. A girl born in 1951 was expected to live to 81, and a boy to 77. By 2018, the latest Office for National Statistics cohort figures show an increase of over 10 years for newly born girls and over 12 years for boys, to 92 and 89 respectively. Life expectancy at older ages has also gone up during this period and is projected to continue to increase in future years These welcome increases in life expectancy of course have implications for the state pension. As people live longer, they invariably also spend longer in retirement. Had we not equalised the state pension, women would be expected to spend over 40% of their adult lives in retirement, a proportion which would only continue to increase. This situation is not sustainable for any Government and means increasing taxes for the working population. Going as far as some campaigners have urged and revoking the 1995 Act would represent a loss of over £70 billion to the public purse The state pension must be maintained on an affordable footing for future generations of pensioners and taxpayers. That necessitated the Government’s action to equalise and then increase the state pension age through the Pensions Acts of 1995, 2007, 2011 and 2014. Any further transitional arrangement would come at great cost. The Government have considered many options and all of the proposals would be wrought with substantial legal problems, as well as financial ones. Any amendment to the current legislation which creates a new inequality between men and women would unquestionably be highly dubious as a matter of law. Causing younger people to bear a greater share of the cost of the pensions system in this way would be unfair and undermine the principle of intergenerational fairness that is integral to our state pension reforms Let me turn to some of the proposals from the debate. The Scottish National party seeks a full compensation package of at the very least the reverse of the 2011 Act. The SNP costed this at £8 billion, but that is a vast underestimate: it would actually cost the taxpayer over £30 billion and potentially even more. There is also no doubt that the Scotland Act 2016 gives the Scottish Government the powers they need to address this issue. The Labour Opposition have made multiple suggestions, with many seeking the full compensation package of £70 billion. In addition, they have proposed in their manifesto keeping the state pension age at 66. That would cost over £250 billion more than the Government’s preferred timetable by 2045-46. Payments on this scale are simply unaffordable and cannot be justified The key choice a Government face when seeking to control state pension spend is to increase state pension age or pay lower pensions, with an inevitable impact on pensioner poverty. The only alternative is to ask the working generation to pay an even larger share of its income to support pensioners. I believe that successive Governments have made appropriate but difficult decisions to equalise and increase the state pension age. A significant concession was made in 2011 so that no woman will see an increase to her state pension age of more than 18 months, relative to the 1995 Act timetable. To renege on our decisions and further increase costs to the public, especially the working population, would be unfair and unaffordable.