Pensions ‘injustice’ leaves generation of women in crisis as inflation bites

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Thousands of older women are struggling with the cost of living because of a pensions “injustice” dating back years that has never been put right, according to campaigners.

They say large numbers of women born in the 1950s are having to go without, or can only afford basics, often because they have used up their savings and do not have the financial cushion to cope with soaring living costs.

Fresh demands for action from the group known as Waspi (Women Against State Pension Inequality) have coincided with a separate campaign to highlight errors that have led to women being wrongly told they are not entitled to a state pension.

This is being spearheaded by former pensions minister Steve Webb, who says some women who have been told they weren’t entitled to anything were actually due payments of more than £4,000 a year.

While these are separate issues, both have particularly affected women born in the 1950s.

Waspi was founded seven years ago to fight for compensation for women who lost out because of the way changes to the state pension age (SPA) were made.

For decades the SPA for women was 60. An increase to 65, phased in between 2010 and 2020, was included in the Pensions Act 1995, but in 2011 the coalition government pushed through a speeding-up of the process. As a result, the SPA for women increased to 65 by November 2018, and then to 66 by October 2020.

Many say they had always expected to receive their pension at 60, then discovered their SPA had increased by four, five or six years. The government did not write to any woman affected by the rise for nearly 14 years after the law was passed in 1995.

Hundreds of thousands of women say they didn’t have enough time to make alternative plans. Some say they gave up work because they had calculated they could afford to manage until they got their state pension, then discovered they would have to wait much longer to get the cash.

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Waspi has always said it agrees with equalising the state pension age for men and women, but not with the way the shake-up was implemented. It is calling on the government to agree compensation for all those affected by the lack of notice “to reflect their financial losses, the sustained damage to their mental health and wellbeing, and the additional impacts”.

In July last year it received a major boost when the Parliamentary and Health Service Ombudsman (PHSO) found the Department for Work and Pensions guilty of maladministration in its handling of the changes. This related to specific failings dating back to 2005 and 2006. However, this was only stage one of the investigation.

The PHSO is now looking at whether these failings led to an injustice for the complainants. This could be followed by stage three, where it makes recommendations to put things right – which could include paying compensation. The ombudsman uses a compensation scale where the amounts range from zero to more than £10,000.

Last week Waspi renewed its calls for “answers and action” from the government, saying there was nothing to stop it awarding “fair, fast compensation” now. Campaign chair Angela Madden says: “Women born in the 1950s have been even more acutely affected by this cost-of-living crisis than we would have been.”

Some only received 12 months’ notice of a six-year delay to their pension, she adds. “In consequence, most in our age group have had to use up all their savings on day-to-day living. We don’t have the cushion we would have had to deal with the cost of living shooting up as it is.

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“It means we can only afford the basics when we might otherwise have had some comfort, after years of saving up and paying into the system.”

It was also claimed last week that despite a major correction exercise being undertaken by the DWP to deal with historic errors in state pension calculations, mistakes are still being made. Steve Webb, now a partner at actuaries LCP, says many of the errors affect women who previously paid a reduced rate of national insurance contributions – commonly known as the “married woman’s stamp”.

They may find that under the rules of the new state pension they lack the 10 years of full-rate contributions necessary to qualify for any payment.

But the new system has a special concession for these women, provided they were paying the reduced stamp 35 years before they retired. They can automatically get a state pension of £85 a week if they are married, or £141.85 if they are widowed or divorced (these are the 2022-23 amounts).

A previous freedom of information request from Webb revealed that the DWP discovered in 2019 that it was making errors on such cases, and a correction exercise started. But the former minister says he has continued to hear from women who have wrongly been told they have no pension entitlement.

He has written to pensions minister Guy Opperman, and is calling for action to be taken to stop this from happening in future.

Estelle Henley, 66, was shocked when she was told she wasn’t entitled to a state pension. Photograph: Handout

“In some cases … women were told they had zero entitlement when the correct figure was over £4,000 a year,” says Webb. “What concerns me most is how many other women there may be who simply trusted what the DWP has told them and are now struggling to get by without the pension which is rightfully theirs.”

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Estelle Henley reached state pension age in April this year when she turned 66, and was shocked to be told that she wasn’t entitled to a pension.

Before retiring, she worked full-time in her daughter’s pub for 15 years. She lives near Southampton with husband Rob, 72, who is still working part-time.

Henley claimed the benefit in the usual way, but received a letter from the DWP saying that “we cannot pay you UK state pension” because she did not have the required number of years of contributions.

As a result of previous correspondence with the department, she was aware of the special rules for people who paid reduced-rate national insurance contributions, so she challenged the DWP directly and also contacted Webb.

Webb says the department has now accepted its error, contacted Henley to apologise and paid arrears back to the start of her claim.

In response to Webb’s campaign, the DWP said: “This year we will spend over £110bn on the state pension and our priority is ensuring every pensioner receives all the financial support to which they are entitled. Where errors do occur, we are committed to identifying and rectifying them.”

It added: “The government decided over 25 years ago that it was going to make the state pension age the same for men and women as a long-overdue move towards gender equality. Both the high court and court of appeal have supported the actions of the DWP, under successive governments dating back to 1995, and the supreme court refused the claimants permission to appeal.”

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