Jeff Salway: Pension changes are inevitable - but this timetable is unfair

Was it naive to think that the coalition agreement was a document to which its architects would remain faithful? I sometimes wonder whether anyone in the government has even read it.

A happy-go-lucky approach to the cursed agreement means the coalition's changes to the timetable for the rise in the state pension age for women is just the latest of several pledges to be breached.

The issue is not that the pension age is rising - that has to happen - but the rate at which it is to increase, a distinction that campaigners have made clear. While pension protests from the public sector were inevitable regardless of the reasonable reforms proposed, the growing backlash against the acceleration in the women's pension age has always focused on the timetable.

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Under the timetable set out by the Labour government, the pension age for women was to be levelled with that of men by 2020. It then wanted to raise the pension age for both sexes between 2024 and 2026.

But the pension age for both men and women will now rise to 66 between 2018 and 2020. That is six years earlier than previously planned - and it contravenes the May 2010 Coalition Agreement. That said: "We will phase out the default retirement age and hold a review to set the date at which the state pension age starts to rise to 66, although it will not be sooner than 2016 for men and 2020 for women."

About 500,000 women will see their pension age put back by more than a year. That will include around 300,000 women in their mid-fifties who will now have to wait 18 extra months or more for their state pension and some 33,000 who face an extra two-year wait.

Some face a serious shortfall as a result: a 55-year-old woman born in 1955 who previously expected to claim her state pension at 60 will now have to wait until she is 66, losing out on 37,000 in state pension payments.

The coalition continues to insist that this was a decision that it couldn't duck, but it hasn't satisfactorily explained the rationale behind changing the timetable. There is no question that the state pension age has to rise, but the case for the revised timetable has not been made.

The burden isn't being shared by millions, but borne by a section of the population that is already at a disadvantage financially. The proposed timetable simply doesn't give those affected enough time to plan accordingly, whether that is plugging the shortfall suffered due to being denied their pension, or altering their pension savings or work arrangements. Why not delay the start of the increase but raise it more sharply once it starts, giving women in their fifties more notice?

Those arguing that women need to accept their lot in the name of equality are ignorant of the financial circumstances of many of those set to be affected.

For example, nearly half a million women are claiming jobseeker's allowance, a number that will rise as women are disproportionately hit by job cuts in the public sector. Then there are the many women who have not been able to build their own pension savings because they were bringing up children or expected to rely on their partner's pension. Up to four in ten women who will be affected by the changes are single, while more than a third are not in work and four in ten have no private pension.

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This isn't about gender, despite efforts to paint it as such, but about fairness. The government cannot be accused of targeting women, but it can be accused of being arbitrary and unfair towards a specific group of people who will suffer the consequences of a policy in which there is room for compromise. It won't be the last breach of the coalition agreement which, it is now clear, was not so much a set of pledges as a series of empty platitudes.

THE Chancellor is supporting the Independent Commission on Banking's (ICB) recommendations for a "firewall" between the retail and investment operations in the banks. Don't underestimate the implications for customers.

The ICB estimated that making the banks hold greater reserves - it recommended a rise from 7 per cent to 10 per cent - could send domestic mortgage costs rising by 1 per cent. And that is before you consider the costs to the banks of making the changes needed in order to meet the new rules, such as ensuring their investment and retail operations have separate staff, IT systems and funding processes.

How are the banks going to pay for this? Not a tricky one: the shift towards fee-based banking, plus higher charges and less competitive products, has just gained more momentum.

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