What happened to pensions in April 2024?

With April came a new tax year and a big rise in the State Pension due to the government’s triple lock policy. The full new State Pension has risen by 8.5% to ￡11,502 a year, while the basic State Pension rose by almost ￡700 to ￡8,814 annually.

Despite these increases, they still fall short of the Pensions and Lifetime Savings Association’s (PLSA)’s, recommended minimum standard of living cost for a single person in retirement. According to the PLSA’s Retirement Living Standards, a single person would need an annual income of ￡14,400. This figure takes into account essential expenses such as housing, food, transportation and social activities. This rises to a recommended ￡22,400 for a couple to achieve the same standard of living, meaning they’d have around ￡604 extra after the latest State Pension increase.

For the 3.8 million women born in the 1950s, this increase in the State Pension is too little too late. The changes in the 1995 Pension Act raised many women’s retirement age without sufficient notice, leaving them in a financially vulnerable position. That’s where the Women Against State Pension Inequality, or ‘WASPI’, movement comes in.

The WASPI movement

In 2015, a group of women founded the Women Against State Pension Inequality, or ‘WASPI’, movement. They argued that the new eligibility criteria for the new State Pension disproportionately harmed many women born in the 1950s through lack of communication from the Department for Work and Pension (DWP).

Background information

In 1995, the Conservative government announced a plan to equalise the State Pension age for men and women, gradually raising the retirement age for women from 60 to 65. In 2016, the new State Pension was introduced. For women born after 5 April 1953, they’d now require 35 qualifying years of National Insurance contributions to qualify for the full amount.

Inequality accusations

The WASPI movement agrees with the equalisation of State Pension age, but argues that there was a lack of communication, leading to many women being unaware of these changes and as a result ill-prepared for a much later retirement age. A woman born on 1 January 1955 may have expected to retire in 2015, but under the new rules would have only been eligible for the State Pension in 2021 at 66 years old.

Was the DWP in the wrong?

In 2019, the Parliamentary and Health Service Ombudsman (PHSO) launched an investigation into the Department for Work and Pensions’ communication surrounding the State Pension age changes. The investigation found ‘maladministration’, concluding that the government had failed to adequately inform thousands of women?of these changes.

There was injustice for the affected women relating to:

• communicating State Pension age changes;
• communicating information about National Insurance qualifying years; and
• complaint handling.

The PHSO recommended that the compensation for women affected by the State Pension age changes should be between ￡1,000 and ￡2,950 each. This is significantly less than WASPI had been campaigning for, at ￡10,000 for each woman impacted. So far, the DWP has made no commitment to follow the recommendation and pay any form of compensation to those affected.

Next steps

WASPI campaigners are still focused on achieving compensation for the affected women. This likely involves continued legal challenges and lobbying efforts aimed at pressuring the government for a resolution. Currently the government is considering the investigation findings, with a second reading rescheduled to 17 May 2024.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.