A group of females have lost a case at the High Court regarding a dispute over a controversial rise in pension age for women.
Daniel Elkington an Independent Financial Planner at MT Financial Management has had this to say:
“Many women born in the 50s have been less well paid in work than men. We know the 80s and 90s weren’t the period of liberalisation of women, but that this seems to be improving now. Many of the women affected by the harmonisation of pension ages have much less in private pensions as they were supporting the economy in methods other than working for an employer. These have been, typically, acting as the family carer – which is hugely valuable but not remunerative. It seems unlikely that this will be the case when the current generation of 30/40-somethings retire.
“However, the act of parliament to increase the pension age was passed in 1995 and it was believed, at the time, that 15 years before the changes started to take place was ample time to put plans in place. That meant that anyone aged 45 and under at the time would be affected. However, this was poorly communicated; for instance, via widespread direct mailings to those affected that did not occur until 2004.
“The WASPI and Backto60 campaign, which arose as a result of this lack of communication, may now take this to the Court of Appeal or even the Supreme Court who may decide they can rule as to whether this change was lawful or not. That said, it is a bit late as it has already happened and what relief the courts can give at this point is a little unclear.
“The people who were hard hit were those born between 1953-57. They were impacted, with very short notice, by The Pensions Act 2011. Therefore, despite having changed their retirement plans after 1995 and put something in place for retirement, now had to find extra money with only five years’ notice. The 2011 Act affected men and women equally, however, and so it isn’t likely that a claim of gender discrimination can be made.
“The fact is, that while it is never the wrong time to start saving for retirement, typically people use the pension tax wrappers to do so, due to the tax-free nature of the contract. The government provide a bonus for paying in through the shape of tax-relief. Even if you are at the door to retirement, quite often people make a large contribution to pensions in the final few years to boost their retirement funding by claiming tax relief. This can have the effect of adding at least an extra 25 per cent. These investors may also be able to withdraw it all tax-free over a period of a few years now they don’t have to buy an annuity.
“Although this sounds like a barber telling you to get a haircut – people thinking about retirement should always approach a financial adviser as most offer a no-obligation initial consultation of an hour or so. This will include a discussion around the risks relevant to retirement planning as well.”