The government is set to re-examine its decision not to award compensation to up to 3.8 million women affected by changes to the state pension age, following the emergence of new evidence.
Work and pensions secretary Pat McFadden informed the Commons that ministers would reconsider the refusal of compensation for women born in the 1950s, whose state pension age was raised to align with men’s.
He stated that “evidence” not presented to his predecessor, Liz Kendall, has come to light since the decision was made last December.
Labour had previously faced criticism for rejecting compensation, despite a recommendation from the Parliamentary and Health Service Ombudsman (PHSO).
The PHSO had suggested that these women should receive up to £2,950 each, amounting to a potential total cost of £10.5bn, due to poor communication that hindered their ability to adequately plan for retirement.
The new development comes after court proceedings led to the rediscovery of a 2007 Department for Work and Pensions (DWP) evaluation. The document led to a halt in automatic pension forecast letters being sent out.
Angela Madden, chair of Women Against State Pension Inequality (Waspi), hailed the decision as a “major step forward.”
However, Mr McFadden cautioned that the reconsideration does not guarantee that ministers will ultimately award compensation.
He told MPs: “Retaking this decision should not be taken as an indication that the government will necessarily decide that it should award financial redress.”
“The work will begin immediately and I will update the House on the decision as soon as a conclusion is reached.”
Here’s everything you need to know:
Who are the Waspi women?
‘Waspi’ stands for Women Against State Pension Inequality, the name of a campaign group set up in 2015 to fight for compensation.
Its members claim that large numbers of women born in the 1950s were unfairly financially penalised due to miscommunication regarding the decision to raise the state pension age of women to equalise it with men.
Many say they had expected to receive their pension at 60, and made financial plans on this basis. The increases to 65 and 66 came without adequate warning, they argue, leaving many struggling with living costs.
Originally due to be phased in between 2010 and 2020 – as per the 1995 Pensions Act – the state pension age increase to 65 came into effect by November 2018 after it was sped up by the coalition government in 2011. The increase to 66 then came by October 2020.
A key claim of the group rests on the fact that the government did not write to any of the woman affected by the rise for nearly 14 years after the law was passed in 1995. It would not be until 2009 and 2013 that the DWP sent letters about the respective changes made in 1995 and 2011.
What did the PHSO recommend?
The Parliamentary and Health Service Ombudsman (PHSO) released the findings of its five-year investigation in March 2024. It was a damning assessment of the DWP’s handling of the issue.
The Waspi group’s claim of the changes being poorly communicated was partly upheld by the PHSO, with the report stating “too many people did not understand their own situations and how the new State Pension affected them personally”.
The report called the DWP’s failure to respond to official feedback on the issue “maladministration”.
It also covered the department’s complaint-handling procedure and found it “did not adequately investigate or respond to the complaints it was considering” – another maladministration.
However, while the PHSO report accepted the DWP’s poor communication caused some women to lose “opportunities to make informed decisions”, it also made clear it does not believe this led to “direct financial loss”.
The Ombudsman ultimately recommended that the women should be compensated up to £2,950 each, a package with a potential total cost of £10.5 billion to the exchequer.
Why did the government refuse to compensate them?
The government said it has accepted the Ombudsman’s finding of maladministration and has apologised for the 28-month delay in writing to 1950s-born women.
But it said evidence showed only one in four people remember receiving and reading letters that they were not expecting and that the great majority of 1950s-born women did know that the state pension age was changing.
The government said a blanket compensation scheme, which could cost taxpayers up to £10.5 billion, cannot be justified.
It would also be impossible to deliver a tailored compensation scheme taking into account individual circumstances that is fair, value for money and feasible, it added.
In a statement, Ms Kendall said: “These two facts: that most women knew the state pension age was increasing and that letters aren’t as significant as the Ombudsman says, as well as other reasons, have informed our conclusion that there should be no scheme of financial compensation to 1950s-born women, in response to the Ombudsman’s report.”
