Tuesday, 17 July 2007

Watch out for the 'cliff edge'!

I've recently had over a thousand letters and e-mails from women around Britain raising issues with me about their pensions. In the course of reading all of these letters, something suddenly struck me. The state pension changes being introduced on 6th April 2010 would be of huge benefit to many of these women - but they are too old to benefit as most of them will have turned 60 by that date. (In brief, the new rules make it much easier for a woman who has spent time out of paid work bringing up children to get a decent pension).

Now you may say that any change in the rules is bound to have a set of people who don't benefit, and you would be right. But my point (as aired on the Today programme this morning and in the Telegraph and Mail yesterday) is that the difference for some women is so huge, it is quite unfair to bring the changes in overnight. It's like a 'cliff-edge' where if you are the right side of the line you could get an extra £20,000-£30,000 extra over the course of your retirement, but if you are just one day older you miss out completely.

My argument is that pension changes are usually phased in, and so should this one be. I would suggest that people who reach state pension age within (say) 3 or 5 years of 2010 should get part of the benefit of the new rules - perhaps on a sliding scale the nearer they retire to 2010.

I accept it would be a bit messy, but it would remove a very arbitrary cut-off which would just increase the sense of resentment that many women feel about their pensions.

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