The persistence of lack of memory. How the state retirement age was changed and communicated
Old sins have long shadows. The equalisation of state pension age was first mooted in the early 1990s and was enacted in 1995. Yet it remains controversial now. The action group WASPI campaigned in the last general election and that campaign arguably made the difference in some marginals. Theresa May might conceivably have got an overall majority if it had not been for their efforts and the whole course of Britain’s departure from the EU, among other things, might have been radically different.
What are they campaigning about? The argument shifts from point to point. The current focus is on the absence of notice given to the women who were affected by this change. A Parliamentary Research Paper published this week, State Pension age increases for women born in the 1950s, looked at the claims on this.
A key section has the title “Did women affected have advance warning?” Its three subsections are headed: “How much notice should people get?”; “What did the Government do?”; and “How aware were women affected?”.
Other sources of information are dealt with in just three words (“including press coverage”). This by itself shreds the value of the report to pieces. In practice people get their information about pensions from many sources, public and private. They watch TV. They listen to radio. They read newspapers. They look online. They look at their company pensions materials. They plough their way through their personal pension documentation. They talk to IFAs. They talk to friends. Any examination of the advance warning that women got needs to look at all of those sources.
As it happens, there was plenty of press coverage. I was going to look into this myself, but I found that Josephine Cumbo of the FT had beaten me to it. In the period 1993-2006, she found more than 600 mentions in the national press. As she notes, it appeared on front pages. It appeared in tabloids. The controversial nature of the changes was fully aired. This was not a law change that was smuggled out in secret.
But let’s give the WASPI women the benefit of the doubt and accept that they somehow missed this. So let’s think carefully about what is really being said when it is complained that insufficient notice was given. The complaint is not, on the surface at least, that the change should not have been made. Not even a group that campaigns for the restoration of sex inequality under the name “Women Against State Pension Inequality” has the gall to argue that. The complaint is that if only I had been told, I would have done something different.
“Something” is usually conveniently unspecified. In practice, however, it can amount to only one thing: that the individual would have saved more money earlier. Let’s leave to one side the fact that means that the money that has not been saved has in practice already been spent on something that the individual would have wanted (so the individual, having consumed cake is now wanting to have it again). This idea of earlier saving implies that the individual, if only she had been told, would have planned rigorously for her retirement.
That’s hard to reconcile with the evidence or indeed common sense. Even if the changes had been perfectly understood by all, many would not have been able to afford to do more. Many would not have wanted to. The tax advantages for saving in a pension had always been there, but were not taken up with anything like the enthusiasm that financial logic would have suggested.
It is disappointing, to say the least, that the Parliamentary Research Paper did not look at information about pensions provided in the private sector. In the early 1990s, occupational pension schemes were having their own torrid time equalising retirement ages. When the state followed suit, they made sure that they built that into their scheme booklets.
If the compilers of the Parliamentary Research Paper had done any research in this area, they would have found that the point was routinely covered in the mid-1990s in scheme booklets. Here’s a typical example (not one drafted by me, though I certainly put together a few at that time). As you can see, anyone who read such statements would have been quite clear about the nature of the change that had been made.
The conclusion we can draw about women who were members of such schemes who were unaware of the change in state pension age is that they did not look in any great detail at their pension scheme literature, or if they did, it did not sink in. That suggests a lack of interest in long term saving and casts doubt on whether they would have paid any attention at the time to any government communication either.
These, remember, were the women who were likely to be among the most interested in pensions, already having made private arrangements. The rest were going to be a lot less interested.
As it happens, this fits well with other evidence we have. A 2005 DWP Paper on Women and Pensions noted that only 22% of women had worked out what their retirement income would be and only 47% of women said they had looked into saving or investing for retirement. Perhaps one leaflet from the government would have galvanised the indolent into action. Personally, I am seriously sceptical.
So, contrary to the implied argument being made by WASPI and its supporters, the changes to women’s pension ages were widely discussed in the 1990s and the early 2000s and they were communicated to many by sources other than the government – and yet they still were not absorbed by many. The women affected have already had the benefit of the money that they spent and they have not noticeably been otherwise disadvantaged by any lack of notice (as opposed to disappointed).
Their claim to any form of compensation is weak. The inverse relationship between the vehemence with which they press their case and the merits of it is striking.
Upton Sinclair supposedly observed that “It is difficult to get a man to understand something when his salary depends upon his not understanding it”. It seems that it is just as difficult to get a woman to remember something when her pension depends on her not remembering it.
What MPs of all parties have to wrestle with is that WASPI and their supporters, no matter how misconceived, have votes at their disposal. Making sure that they dispose of them in a favourable manner without wrecking longstanding pensions policy positions might be a tough balancing act.
Alastair Meeks is a former Chair of the Association of Pension Lawyers