The UK government has stirred up a hornet’s nest with its decision to deny compensation to what could be millions of “Waspi women”.
The women are said to have lost out because of government failings in the way changes to the state pension age were communicated.
Who or what is Waspi?
It stands for Women Against State Pension Inequality – the name of a campaign group set up in 2015 to fight for compensation. Perhaps not surprisingly, its logo features an image of a wasp.
“Waspi” recently made it into the Collins English Dictionary, which defines it as “a woman born between 1950 and 1960 who was disadvantaged by the 1995 Pensions Act, which increased her pensionable age from 60 to 65”.
As to how many women can be accurately described as Waspi women, there is some debate. The potential total is 3.5 million-plus if you include every woman born in the 1950s.
So how did they lose out?
Waspi and others have claimed for years that large numbers of older women were penalised financially and are now struggling with living costs because of the way the decision to raise the state pension age for women to match that of men was made and communicated.
Many said they had always expected to receive their pension at 60, and had made their financial plans on that basis. Some said they only discovered their state pension age had increased by several years after giving up work.
They argue they were not given enough warning to make plans to bridge the financial gap.
The parliamentary and health service ombudsman (PHSO) spent years investigating. In an initial report in 2021, it found the Department for Work and Pensions guilty of maladministration in the handling of the changes. Then, in March this year, its final report said those affected should be compensated.
How did the change come about?
For decades the state pension age for women was 60. An increase to 65, phased in between 2010 and 2020, was included in the 1995 Pensions Act, but in 2011 the coalition government sped up the process.
As a result, the state pension age for women increased to 65 by November 2018, and to 66 by October 2020. Many women said their plans were thrown into chaos when they discovered their state pension age had increased by four, five or even six years.
Crucially, the government did not write to any woman affected by the rise for nearly 14 years after the law was passed in 1995. It was not until 2009 to 2013 that the DWP sent people letters about the 1995 and 2011 changes.
What happened this week?
The government has finally revealed what it will do – or, rather, will not do – to put things right. After playing its cards close to its chest during the general election campaign, it has ruled out a financial compensation scheme of any kind for women affected, provoking a huge row.
On Wednesday, the chancellor, Rachel Reeves, said that improving public services was a higher priority than spending billions on compensating Waspi women.
Many MPs and campaigners have reacted with fury. The Liberal Democrats said it was a “day of shame” for Labour, while the health ombudsman, Rebecca Hilsenrath, criticised the decision to deny compensation.
How many people could have got compensation?
That is not clear, which has arguably made it easier for the government to refuse any payouts. The PHSO’s final report said “thousands of women may have been affected” and “are owed compensation”.
It said paying out to all of the 3.5 million-plus women born in the 1950s at its recommended level of between £1,000 and £2,950 each would cost between £3.5bn and £10.5bn, but added: “Not all women born in the 1950s will have suffered an injustice.”
Campaigners had called for payouts of £10,000-plus.
How much money have people lost?
One case study said she had lost £39,000. Another said she lost about £45,000 as a result of her state pension age being six years later than she had planned for.
Some women mentioned even larger sums. One claimed she lost more than £442,000 in additional pay that she would have earned had she stayed in her job instead of giving up work. However, the ombudsman said it did not consider that these sums amounted to “direct financial loss”.
What’s the government’s argument for saying no?
It has pointed to survey evidence from 2006 that it said showed 90% of women in the relevant age group knew about the planned state pension age changes.
It also said there was “evidence on the ineffectiveness of unsolicited letters that the ombudsman did not take properly into account”, and that it could therefore not accept that sending postal notifications earlier would have had a big impact.
Ministers say a blanket compensation scheme costing up to £10.5bn could not be justified given the state of the public finances and it would also be “impossible to deliver a tailored compensation scheme taking into account individual circumstances that is fair, value for money and feasible”.
What happens next?
The row was front-page news on Wednesday morning and meant Keir Starmer came under attack at prime minister’s questions. Campaigners will now be hoping the row gathers momentum, forcing a government rethink.
The Lib Dems have made clear they will be continuing to press the government, with the former pensions minister Steve Webb arguing: “MPs should not take this decision lying down.”
On Wednesday, Downing Street said there were “no plans” for a vote in parliament on whether to compensate those affected.