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Women's state pension age changes – evidence from the English Longitudinal Study of Ageing

Posted on 21 June 2011 by Natasha Wood, Senior Researcher .
Tags: ELSA, English Longitudinal Study of Ageing, income and welfare, Pensions bill, Retirement

MPs voted last night to give the Pensions Bill a second reading but ministers have promised to look at ‘transitional arrangements’. A look at recent evidence from the English Longitudinal Study of Ageing (ELSA) sheds light on why one aspect of the bill has caused such disquiet.

If the Bill becomes law as it stands it will mean that by 2018 the age at which women can draw their state pension will increase from 60 to 65. For both men and women there will then be a further increase to 66 by 2020. The previous Government had already agreed to equalize the state pension age (SPA) for men and women. The current bill speeds up the change and aims to achieve equalization two years earlier than originally suggested.
Critics of the bill say that it’s unfair for some women to be given as little as five years' notice of a change to their state pension age, because it won’t give them time to change their savings plans for retirement. For some women the proposed change will mean an extra two year wait for their state pension, and a potential shortfall of £10,000 in their retirement income.

Evidence from ELSA, run by NatCen in collaboration with University College London (UCL) and the Institute for Fiscal Studies (IFS), shows that many of the women affected by the original change to the state pension age suggested by the last Government weren’t aware of these changes. Speeding up the change could mean that this lack of awareness has an even greater impact because there’s little time to get the message out or for women to change their plans.

ELSA is a representative study of people aged 50 and above in England, who have been interviewed every other year since 2002. We collect extensive information on work and pensions and how people plan for their retirement, among many other topics. Since 2006 we have asked people if they’re aware of when they will be eligible for their state pension.

Among women not affected by the changes most (around 80%) know that they will get their state pension at 60. But for those affected by the changes their knowledge of when they will be eligible for their state pension is much lower.

In 2008, fewer than half (43%) of the women who, at that point, would not be eligible for their state pension until they were 65 were aware of the planned change. For women affected by the “phasing in” period (where their state pension age falls somewhere between 60 and 65 years due to the introduction of the changes over time) knowledge levels were even lower with less than a quarter (24%) knowing their state pension age to within 3 months.

These findings highlight two things:

  • Many of those directly affected by the changes to their state pension age aren’t aware of the changes and so may be in for a nasty shock at some point in the next five years.
  • Women caught in the complicated phasing-in stage (who become eligible for the state pension at a specific date based on their date of birth rather than a specific age), have even more trouble working out when they will be eligible.

Among those expressing concerns about the bill in its current form are Age UK and Saga. They and many others will be watching closely to see what happens next. If the bill is passed, data from future waves of ELSA will be crucial to understanding the impact of change for these women over time.

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