Govt could freeze pension credit age for women: McPhail

The government’s “transitional arrangements” to help women hit hardest by the Pensions Bill could involve a pension credit concession, according to Tom McPhail, head of pensions research at Hargreaves Lansdown.

The Bill will equalise the state pension age (SPA) for men and women at 65 in 2018, and then raise it to 66 in 2020. This means around 500,000 women born in 1954 will face up to an extra two years wait before they can claim their pensions.

Last night, during the second reading of the Pensions Bill, secretary of state for work and pensions Iain Duncan Smith said the government would not delay raising women's SPA. However, he said the government may bring in additional support for women most affected by the change.

McPhail said this transitional arrangement could involve using pension credit to placate women who face financial difficulty because of the higher SPA.

Pension credit is available in two forms: guarantee credit and savings credit. Guarantee credit is available to people who have reached their SPA, and tops up weekly income to £137.35 for single people or £209.70 for couples.

Savings credit is available to the over-65s only. It is worth up to £20.52 for single people or £27.09 for couples.

"The eligibility age for pension credit is currently pegged to the SPA," McPhail said.

"So in 2016, when the SPA begins to rise, the pension credit age could be held and women most affected by the changes could claim some pension credit for a year or so before they get their full pension.

"The pension credit age could be held at 64 until 2020, when it would come back into line with the SPA of 66."

McPhail added this method would help women facing the worst hardship as it is means tested, and would only present modest costs to the government.