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Just two weeks ago the Government announced that it was raising state pension age faster than planned, but research shows that many women are still suffering from previous increases, and are poorer because of it.
That's according to a new report from the Institute for Fiscal Studies (IFS), which shows that older women are worse off as a direct result of state pension changes, with an average loss of £32/week. This is based on the finding that, between 2010 and 2016, the state pension age for women rose from age 60 to 63, resulting in 1.1 million fewer women receiving a state pension.
This means that affected households are receiving around £74 a week less in state pensions and other state benefits, saving the Government £4.2bn in the process. However, the reform has increased employment rates among women aged 60 to 62, boosting gross earnings by £2.5bn in total – which, in turn, has boosted Government finances by a further £0.9bn – equivalent to an average of £44 per week.
The net effect is that household incomes for women in this age group have fallen by around £32 per week on average, while Government finances have been boosted by £5.1bn a year. The falls in household incomes have pushed income poverty among 60 to 62-year-old women up sharply, said the report, but encouragingly, there's been "no evidence of any change in measures of material deprivation", so hopefully no-one's feeling the effects to too much of a devastating extent.
Jonathan Cribb, a senior research economist at the IFS and an author of the report, said that the increased state pension age is boosting employment among affected women, "but this is only partially offsetting reduced incomes from state pensions and other benefits … It is important that the Government communicates the ongoing increases in the state pension age clearly so that families can plan for their retirement as well as possible".
If you're concerned about the ongoing rise in state pension age and want to make sure you're completely prepared for it, the only thing to do is to get saving. Make sure you contribute to your workplace pension scheme, and consider saving into an ISA as well, be it a cash, stocks & shares or Lifetime variety. That way, you can boost your finances as much as possible for a secure retirement income, and may even be able to retire sooner than planned.
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