Monday, 20 June 2011

£13bn cost of delaying pension changes

What might the government do to soften the impact on 300,000 women of being forced to wait until 66 to get their state pensions?

The Department for Work and Pensions' own figures suggest the cost of switching to a plan B would be £13bn.

As things stand, women's pension age will be equalised with men's at 65 in 2018 and then raised, to 66, along with men, in 2020.

That saves more than £38bn over ten years from 2016, including the extra tax and national insurance people would pay because they'll have to work longer.

The Plan B (or Option 2 as the legislation paperwork calls it) involves delaying the move to 65 for women to 2020 and the dual move to 66 until 2022.

The government rejects that option because the savings, at over £25bn, are less in the first decade, by around £13bn.

There are, presumably, other possibilities, such as stretching the change over a longer period.

However, delaying the change for women, while moving men to 66, is a non-starter.

European equality law forbids a situation arising in which pension ages of men and women begin to diverge.

Thanks to Laith Khalaf at Hargreaves Lansdown for this information.

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