Could we see a U-turn on pension age increases?
Yet another major reform has been thrown into disarray by the tensions between the coalition members. This once-tightly-knit duo is now arguing the toss about every major change on the cards. The Lib Dems are showing their teeth, and hundreds of thousands of women in their 50s could be handed a lifeline. So what does it mean?
The Lib Dems are said to be very uneasy about the plans for the state pension age to increase faster for women than originally planned - so that up to 500,000 women who have been working to a retirement goal could have the rug pulled out from underneath them at the last minute and they could end up having to work years longer before being entitled to a pension.
The plan has received a ton of criticism, because women who are affected have got to the stage where there is little planning they can do to mitigate the effects of the change - so they effectively have no choice but to continue working. Apparently about 40% of the women who are affected don't have any kind of private pension to fall back on, so this move scuppers all their plans.
By comparison, the state pension age for men will stay the same until 2016, at which point it will begin to rise to 66, giving them plenty of time to adapt to the change.
There are a number of alternatives on the table, including increasing the pension age more slowly now, but raising it faster after 2020, which arguably affects people who have a bit longer to plan their income in retirement, so is less unfair. This would mean that after 2020 we can expect the state pension to rise much faster than currently planned. Then there's the flat rate pension which was going to be paid for by the changes in the pension age. What happens to that is anyone's guess at the moment.
Any changes would have to overcome the usual Westminster nonsense, and there's a lot of talk that the Treasury is wedded to its plans and is going to take a huge blow to shake their confidence. Last week's demonstrations by affected women were apparently not enough. However, with a number of senior Lib Dems being very vocal about the unfairness to this specific group of women, there's a good chance that the Treasury will be forced to revisit its plans and at least consider the alternatives.
So what do you think they should do? What's the best way to raise the state pension age? Is there a good way to do it, or will one group always end up missing out? Let us know in the comments.