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Women better off under old state pension

Not qualifying in 2017 could give £20,000 boost

New government research suggests that almost 500,000 women who won’t qualify for the flat-rate pension in 2017 will be thousands of pounds better off than men of the same age who will qualify under the reforms. 

State pension age differences

When the government announced plans to implement a new flat-rate state pension in 2017, many women whose state pension age meant that they would miss out on this reform felt it was unfair. However, new government research shows that these 430,000 women may actually benefit from not qualifying for the flat-rate pension.

The new rules mean that pensioners retiring before 2017 will not be eligible for the flat-rate pension – so women born between April 1952 and July 1953 (due to retire by July 2017 at the latest) will be unable to claim it. However, men born in this timeframe will qualify because they are due to retire by July 2018 at the latest.

The state pension age for women is rising. Initially it was set to meet the male state pension age of 65 by 2020 but the Coalition brought this forward to 2018. This meant that these 430,000 women saw their retirement age pushed back by as much as 18 months.

Thousands of pounds more pension for women

The government analysis suggests that this disparity between state pension ages might actually be good news for the women in this age group, who may have had to use their personal pension savings to boost their retirement income. 

Its report said that these women can draw their state pension between 15 months and three years earlier than a man born on the same day as them – meaning that they could claim between £8,000 and £20,000 in state pension in the intervening years between their retirement and their male peers’.

This compares favourably with the men who can claim the flat-rate pension. They will only see their basic state pension increase by £160 a year under the new rules.

State pension reforms benefit women

In general, eligible women will be better off than they are under the current rules. This is because at the moment they find it difficult to build up a full state pension due to events like taking time off work to care for children.

These women are expected to get an extra £9 a week after 2017. At the moment, 2.8 million women receive a state pension of less than £80 a week, compared with just 474,000 men.

The self-employed and lower earners will also benefit. The flat-rate pension will recognise self-employed workers’ contributions and, by drastically reducing means-testing, lower earners will be encouraged to save for their old age. 

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