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State pension reforms risk creating further social inequalities

28 April 2019

State pension reforms risk creating further social inequalities, according to a new report from the International Longevity Centre.

Analysis by the thinktank found that those best positioned to take advantage of increases in the state pension age were more highly educated, skilled and better paid.

In contrast, for disadvantaged workers with greater health and care needs as well as caring responsibilities, changes in the state pension age could have a detrimental impact.

Women will be worst hit, with the majority of domestic work and unpaid care work carried out by females. It is estimated that women with lower education levels in the UK may lose up to 25% of their monthly pension entitlements under the new system compared to before.

As part of its research, ILC studied five other countries and found that they had managed to implement state pension reforms without exacerbating social inequalities to the same extent as the UK. The findings showed that countries that had a strong, reliable basic pension not dependent upon on contributions suffered less noticeable social inequalities associated with a rising state pension age.

In response, ILC has called upon the UK government to look at the examples set by other countries and said there needs to be greater support of workers’ health and wellbeing through job and retirement flexibility.

Dr Brian Beach, senior research fellow, ILC, said: “There is a need for wider approaches to encourage work in later life beyond reforms to pensions, including measures to address health and wellbeing at work, to tackle age discrimination in the workplace, and to support those juggling work and caring.”

Professor Alan Walker, Sheffield University, added: “Our research shows that increasing pension age in line with life expectancy is a very blunt instrument that exacerbates inequality and particularly harms older women. If other EU countries can manage the demographic transition without these negative effects why can’t we?”

 

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