More than a million women in their early 60s have become poorer as a result of delays to their state pensions, according to a new study.
Researchers at the Institute for Fiscal Studies (IFS) found that, on average, women aged between 60 and 62 were now £32 a week worse off.
As a result poverty rates among that group have risen sharply, it said.
But the IFS also said the savings, and extra tax from working women, meant the state was £5.1bn a year better off.
Public sector debt is £1.75 trillion and the government borrowed £46.2bn in the past financial year.
The government said its pensions policy was “fair and sustainable” and matched continuing rises in life expectancy.
However, the campaign group WASPI (Women Against State Pension Age Inequality) said the research was shocking.
“Once again, this shows that the government has implemented state pension age (SPA) reforms without adequately considering the full impact of these changes on the women affected,” said WASPI director, Jane Cowley.
“Whether it is the 3.5 million WASPI women who were not given sufficient warning of rises to their state pension age, or the sharp rise in income poverty among 60 to 62-year-old women, the government needs to sit up and start realising that its changes have devastating consequences on the women affected.”
The IFS study showed that many women in the age group already affected by the pension change have continued working.
But the effect of waiting longer for their state pension has, on average, outweighed the gains made by those who have continued to earn a salary.
Thus the female 60-62 age group as a whole was earning an extra £2.5bn a year, an average of £44 per week.
But the same group has also lost £4.2bn in pension and other benefits per year, or £74 per week.
Jonathan Cribb, of the IFS, said the new policy was clearly putting pressure on the budgets of some households.
“The increased state pension age is boosting employment – and therefore earnings – of affected women but this is only partially offsetting reduced incomes from state pensions and other benefits,” he said.
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“Since both rich and poor women are losing out by, on average, roughly similar amounts the reform increases income poverty rates among households containing a woman who has reached age 60 but has not yet reached her state pension age.”
No material deprivation?
Looking at the worst affected individuals, the IFS calculated that absolute poverty rates – measured after housing costs – had increased from 15% of women aged between 60 and 62 to 21% of them.
It said there was no evidence that any of the women were in fact experiencing “material deprivation” -that is, people saying they cannot afford a range of important items.
Such families may have “smoothed” their spending over time, the researchers suggested.
Caroline Abrahams, at the charity Age UK, said the IFS figures were “extremely worrying”.
“While it may have encouraged a number to work longer, many women in their sixties were simply not aware of the rise in SPA and, as was predicted by experts, they have either had too little time to make adequate preparations or have been unable to continue working due to ill health, caring responsibilities or unemployment,” she said.
But the changes have boosted the government finances.
The IFS said that the savings to the public purse had been boosted by the extra income tax and national insurance payments from those women continuing to work, which meant the government’s total saving was now running at £5.1bn per year.
The study said there was also an effect on single men in their early 60s, who used to be able to claim pension credit.
Under the rules, eligibility for pension credit is also being pushed back.
As a result, single men aged 60 to 62 are on average £21 a week worse off, the study suggests.
More to come
The long-standing policy of equalising women’s state pension age with that of men, and then raising it for both groups, has become increasingly controversial.
The decision to equalise the SPA was first made back in 1995.
Many women who are being affected say they were never made aware of the changes, which have now come as a shock to them.
The process kicked off in 2010, with the plan to raise the SPA steadily from age 60 to 65 by the year 2020.
But then in 2011 the government decided to accelerate the policy.
The SPA will thus be equalised at 65 two years earlier in 2018, and then rise by another year to 66, by 2020.
Further increases to 67 and even 68 are in the pipeline.
With the process still under way, women currently qualify for their state pension at nearly 64.
A spokesman for the Department of Work and Pensions said: “More people are in work than ever before, including a record 9.9 million older workers.
“Women retiring today can still expect to receive the state pension for over 24.5 years on average – which is more than any generation before them and several years longer than men.”