Budget Aftermath: Women face phased move to pension age parity

UNDER the Government's new plans to equalise the state retirement age, women under 38 will have to wait until they are 65 to receive a state pension, while those over 44 will still be able to retire at 60, writes Vivien Goldsmith.

Peter Lilley, the Secretary of State for Social Security, said the current retirement ages of 60 for women and 65 for men were 'the last glaring inequality in our treatment of men and women'.

The changes are to be introduced over 10 years from 2010.

Women born between April 1950 and April 1955 will have a phased retirement age which will rise by one month for every month or part of a month that their birthday falls after 5 April 1950. So, for instance, a woman born between 6 September and 5 October 1950 will have a retirement age of 60 and six months.

As part of the change to equal pensions, the Government plans to equalise the terms for earning a full state pension with reduced working years due to caring for children or sick or disabled people. For women, the maximum number of years that can be covered by home responsibility protection (HRP) is currently 19 years while men can be covered for 24 years. This will be equalised at 22 years.

HRP will be extended to cover the state earnings related pension (Serps) which could significantly improve retirement incomes for women who take time off to care for children or relatives.

About 2 per cent of people defer taking their pension and are rewarded by a pension that is 7.5 per cent higher for every year they delay. For those who defer their pension from 2010 onwards pensions will be increased by 10 per cent a year for every year of delay. The maximum period of delay of five years will be abolished.

The Department of Transport will be considering how to phase in changes to the concessionary fares scheme for the elderly. The phasing in of the change to equal entitlement for men and women may not be the same as the timetable for pensions equality.