What does the report on state pension age changes mean for UK women? | State pensions

Thousands of women born in the 1950s could be in line for compensation linked to changes to the state pension age and the potential bill could end up running into billions of pounds.

The Parliamentary and Health Service Ombudsman (PHSO) said on Thursday that parliament needed to act swiftly to ensure a compensation scheme was set up to remedy the “failings” by the Department for Work and Pensions (DWP). But there are indications that getting the government to pay out could be an uphill battle.

What’s behind the campaign and report?

Campaigners have claimed for years that large numbers of older women lost out financially and are now struggling with living costs because of the unfair way that the decision to raise the state pension age for women to match that of men was made and communicated.

Many have said that they had always expected to receive their pension at 60, and had made their financial plans based on that – for example, some gave up work – but then they discovered their state pension age had increased by several years.

That meant they would have to wait much longer to get their pensions but they did not have enough time to make alternative plans to bridge this gap. The PHSO has been investigating the matter for years and has now ruled that the women affected are owed compensation.

How did the changes come about?

For decades it was all very clear and simple: the state pension age for women was 60. An increase to 65, phased in between 2010 and 2020, was included in the 1995 Pensions Act, but in 2011 the coalition government sped up the process.

As a result, the state pension age for women increased to 65 by November 2018, and then to 66 by October 2020.

Many women have claimed their plans were thrown into chaos when they discovered their state pension age had increased by four, five or even six years. Some said they only received 12 months’ notice of a six-year delay to their pension.

Crucially the government did not write to any woman affected by the rise for nearly 14 years after the original law was passed in 1995. It was not until 2009 to 2013 that the DWP sent people letters about the 1995 Pensions Act and 2011 Pensions Act changes.

The Women Against State Pension Inequality (Waspi) campaign group was set up in 2015 to campaign for compensation.

Eventually the PHSO began investigating. In July 2021 it found the DWP guilty of maladministration in its handling of the changes. This related to specific failings dating back to 2005 and 2006. However, this was only stage one of the investigation.

On Thursday, the ombudsman’s final report, combining stages two and three of its inquiries, was published.

How much money have women lost as a result?

One sample complainant said she had suffered a financial loss of £39,000. Another woman said she lost about £45,000 as a result of her state pension age being six years later than she had expected and planned for.

Some women mentioned much larger sums. One said she lost more than £442,000 in additional pay that she would have earned had she stayed in her job instead of giving up work. However, the ombudsman said it did not consider that these sums amounted to “direct financial loss”.

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How many might get compensation, and how much?

There is no clear answer yet to either of these questions.

As to how much, the PHSO said that looking at the sample complainants’ cases, it would recommend they were paid compensation of between £1,000 and £2,950 – a lot less than the £10,000-plus that campaigners have called for.

In terms of how many, the ombudsman said that “thousands of women may have been affected” and “are owed compensation”.

Waspi has said that “hundreds of thousands of women” lost the opportunity to plan for their retirement because they were not notified of the changes.

The ombudsman’s report said compensating all of the 3.5 million-plus women born in the 1950s to the tune of between £1,000 and £2,950 each would cost between £3.5bn and £10.5bn, but added: “Not all women born in the 1950s will have suffered an injustice because of DWP’s maladministration in communicating state pension age.”

In response, Waspi said it wanted “justice” for “all the 3.6 million women affected”. It added: “We are now looking to those who have supported us over the years to put their money with their mouth is and back us on a proper compensation package. All the parties are now in the spotlight, with Waspi women watching and waiting to see how they should best use their votes in the coming general election.”

What happens now?

After the publication of the PHSO report, Downing Street declined to say whether the government would pay compensation or whether an apology would be issued.

The ombudsman said the DWP had “indicated it will not compensate women affected by its failure”. The DWP said it would consider the ombudsman’s report and respond in due course.

The PHSO has taken the unusual step of asking parliament to intervene to ensure its recommendations to compensate the women turn into reality.

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