Spending Review – state pensions and welfare

The welfare budget has again been targeted for savings. In the Emergency Budget in June £11 billion of savings were announced and, in the recent Spending Review, George Osborne set out a further £7 billion of savings to be made by 2014-15. In the context of such major cuts it will be somewhat of a relief to many older people that cold weather payments will remain at £25 for each week of very cold winter weather and that despite rumours that the universal winter fuel payments could be restricted or means-tested they will not be changed.

Other much valued universal support such as bus passes and free prescriptions are also unscathed.  People aged 65 and over receiving the savings credit as part of their Pension Credit will be worse off as the maximum payment will be frozen for 4 years, although many of the other welfare savings will have limited impact on people under state pension age.

For those of working age, in the longer term the Work and Pensions Secretary Iain Duncan Smith has been given the green light to take forward his plans for major reforms to combine a range of benefits and tax credits into a single Universal Credit.

There is considerable support behind the principle of a simpler system with better incentives to save, but these are radical changes which  bring about major challenges. In the meantime, the contributory element of employment and support allowance will be restricted to one year from 2012-13 onwards. This will save £2 billion by 2014-15, but will mean that people unable to work due to disability and ill-health, who are not entitled to means-tested benefits, will get far less return from what may have been 30 or 40 years of working and paying  national insurance.

And the news isn’t good for some 5 million people in their 50s expecting to draw their state pension at 65 or earlier. Under current rules state pension age would have gradually increased to 65 for women by 2020 and then to 66 for both men and women between 2024 and 2026. The Coalition Government had already signalled their intention to speed up this increase and the Chancellor announced that equalisation will now take place in November 2018 and state pension age will rise to 66 for both men and women by April 2020.

This will be a particular blow to some women who face much steeper rises than expected and breaks the Coalition Agreement which says that any rise to 66 will no t start sooner than 2020 for women.   At Age UK we acknowledge that on average people are living longer but are concerned that disadvantaged groups who are most reliant on state pensions and have lower life expectancies  will be hit hardest. Proposals for further increase in state pension age in the future are also expected. We will be working hard to ensure that further reforms only go ahead if health inequalities are reducing, people have the ability and opportunity  to work longer,  disadvantaged groups are protected and everyone is entitled to a decent state pension.

One response to “Spending Review – state pensions and welfare

  1. Is there a campaign to oppose the introduction of the changes to the state pension for women. Women born after 1950 have been penalised have to wait additional years before getting their pension. Now we have been told we have to wait even longer. People plan for their retirement, and the Goverment have wrecked the plans of many people. I have worked full time since I was 16, which means I will have paid NIC’s for 50 years, THIS IS NOT RIGHT. Is there a campaign to try and stop the introduction of these swinging changes.

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