More than a million women are worse off by an average of £32 a week under changes to the state pension age and poor households are being hit the hardest, according to analysis by a leading independent thinktank.
The Institute for Fiscal Studies (IFS) also highlighted a significant boost to the public finances from the government’s move to lift the pension age for women from 60 to 63 between 2010 and 2016.
The increased state pension age was lifting employment and therefore the earnings of affected women but that was only partially offsetting reduced incomes from state pensions and other benefits, the IFS said.
As a result of the change, 1.1 million fewer women were receiving a state pension and the government was providing £4.2bn less through state pensions and other benefits, the IFS said. After accounting for the boost to earnings from higher employment, the net effect was that household incomes for women aged 60 to 62 had fallen by £32 per week on average.
Since both richer and poorer households were losing out by, on average, roughly similar amounts in cash terms the drop as a proportion of income was much more severe for poorer households.
“The falls in household incomes caused by the reform have pushed income poverty among 60- to 62-year-old women up sharply,” said the IFS analysis, funded by the Joseph Rowntree Foundation and the Economic and Social Research Council.
“On the other hand we found no evidence of any change in measures of material deprivation (that is people saying that they cannot afford a range of important items). This might suggest that, despite lower incomes, so far families have generally managed to avoid higher levels of deprivation by smoothing their spending over time.”
The IFS calculated a boost to the public coffers of £5.1bn a year thanks to the rise in the state pension age because it had reduced state benefits, increased employee national insurance contributions and raised employment.
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