Without a strong, sustainable state pension – the bedrock of retirement provision – millions may have their old age blighted by penury.
A hotbed of controversy, today rows rage over: the state pension age, Waspi women, triple lock, gender gap and whether our children will even have a state pension to enjoy.
The focus this spring has been on 1950s women who had to work six or seven years longer than many were expecting. Most women are rightly indignant and some face hardship because their state pension age increase was botched by a lack of notice.
For me (a woman born in the 1950s) other state pension reforms are more pressing than our plight.
We had older friends and relatives whose pension was delayed. Most Waspi women are intelligent, how could they ignore the newspapers and discussions in parliament? Many private pensions altered their women members’ retirement ages more than 40 years ago to equalise with men to hardly a murmur of protest. That ship has sailed.
I do agree wholeheartedly that women are hard done by, especially as the whole system, both private and public, largely favours men. For women to retire with the same amount of money in their pension savings as a man, they need to work and save for an extra 19 years on average.
As pensions auto-enrolment starts at 22, this means that by age three, girls are already falling behind boys in their provision for later life according to the recent Now Pensions gender pension gap report.
Much more affordable than the reputed £10bn to compensate Waspi women, the Department for Work and Pensions and HMRC could do more to identify women with few national insurance contributions and make them aware of the availability of credits to build up their entitlement or tell them of means-tested pension credits and other benefits.
State pension lowest in OECD
More fundamentally, and affecting both women and men, the UK state pension is low by European standards.
OECD figures quoted in the Institute for Fiscal Studies' report, "The future of the state pension", show the state pension and mandatory AE contributions only provide the mean male earner in the UK just over 20 per cent of individual earnings, compared to Italy approaching 80 per cent, France at 60 per cent, or Germany at just over 40 per cent of mean male earnings.
Despite the UK’s relatively miserly retirement provision, the cost of the state pension is colossal. Including pension credit and winter fuel payment it comes to £124bn (2023-24), or 4.8 per cent of national income. Its sustainability relies on continued UK growth of the economy – no guarantees there.
The latest Office for National Statistics figures show that annual growth in employees’ average total pay was 8.5 per cent in May to July 2023. This is the highest figure on record outside of the Covid-19 pandemic.
