Pensions in Spotlight with Pension Age Changes and Working Mum Top-Ups


As campaign group, Back to 60, begins a landmark High Court battle to reverse the decision to equalize men and women’s state pension age, a new report recommends that women who take time off work after having children should receive a pension top up following the birth of their first baby.

Stuart Price, Partner and Actuary at Quantum Advisory, has looked into the chances of a reversal in the pension age decision

Stuart said:

“The state pension age for women was increased to 65 earlier this year to bring it in line with men for the very first time. While obviously frustrating for those caught in the middle, the decision was made back in 1995 during John Major’s Conservative government. The age at which both genders can collect their pensions will further increase to 66 by October 2020 and 67 in 2026, with a possible increase to 68 by 2039 to reflect the fact that people are living longer.

“I certainly sympathize for women born in the 1950s who have been most affected by the changes, many of whom say they did not have time to prepare themselves for the additional wait. They also argue they were not given sufficient information, or details they were given came too late. Women Against State Pension Age Inequality (WASPI) is another group that is actively fighting for women’s rights, requesting an intermediate pension arrangement until they are entitled to the State Pension at 65. Although, a reasonable request on paper, in the current economic climate it is difficult to see where any funds would come from to provide those impacted with some form of recompense.  However, given the passion and determination of those involved, it will be interesting to see what happens next.”

In regard to working Mums, Which? and the Pensions Policy Institute found that mothers who take a career break or work reduced hours to raise a family could be £15,000 worse off compared to those women who work full-time. Furthermore, it was found that they would save £46,000 less than the average full-time employed man. The report suggested that mums should be given a £2,000 contribution to bridge the gap.

Mr Price thinks the proposal makes a lot of sense. He says:

“There is such disparity between not only men’s pensions, but also full-time working women’s pensions compared to those who work less due to having a family.

“While £2,000 won’t come close to evening the playing fields, it will certainly help and make the tough decision of whether to return to work or stay at home with your children a little easier. The recipient can choose which pension scheme to invest the money in, and over the years it will obviously generate interest.

“Although this is one suggestion to ensure people are prepared for their retirement, I think that increasing minimum contributions is still the key to encourage people to save more.”

Stuart Price is a Partner and Actuary at Quantum Advisory, which has offices in London, Amersham, Bristol, Cardiff and Birmingham.

Established in 2000, Quantum Advisory provides pension and employee benefits services to employers, scheme trustees and members.