The life-long school friends split by £44,000 state pension divide

For almost half a century,  many of the girls in the Ilkley Grammar School hockey team have stayed close.

Despite their lives going separate ways — some have enjoyed long successful careers, others concentrated on raising a family, a couple went through divorces and one even managed a rock band — the bond from those happy times in Yorkshire has always remained.

But today the Queen will set out changes to the pension system that will separate three of these life-long friends — leaving two of them £44,000 poorer than the other. And it’s all because of a quirk of when their birthday falls.

Unfair: Denise MacGregor (top left) is among 700,000 women who will miss out on larger pensions. But lifelong friend Linda Hull (next but one to Denise), who is just four months younger, will get the new £144-a-week state pension

Denise MacGregor (circled top left) and Katherine Worsfold are among 700,000 women born between April 6, 1951, and April 5, 1953, who will miss out on larger pensions because of a double whammy of reforms outlined in a Bill today.

But lifelong friend Linda Hull (circled next but one to Denise), who is just four months younger, will get the new £144-a-week state pension.

Up and down the country, friends in this age group — who grew up fighting for women’s rights and their own careers — are being separated by what they see as a cruel rule change.

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And a further bitter pill is that men born on the same day as them will be better off — even though the changes are designed to bring equality in the state pension.

Mrs Worsfold, who was born on March 17, 1953, says: ‘It’s just not fair — it’s essentially a birthday lottery.

‘We are trapped. Women younger than us and men two years older will get the new pension, but we won’t.’

WHAT EXACTLY IS HAPPENING?

For years, women in retirement have been treated as second-class citizens.

The state pension — currently a basic £110.15 a week — has, historically, benefited men. Females earned less and took more time off to raise a family.

Some also opted to pay lower National Insurance (NI) contributions in order to benefit from their husband’s pension.

Men get an average weekly state pension of £148; women get just £131.

Winner: Linda Hull will get the £144 rate

The state pension is also impossibly complicated. Women qualify for it at 61, men at 65. Anyone with at least 30 years’  NI contributions is paid the full basic rate, with reductions made for every missing year.

On top of that, higher earners can receive the state second pension (S2P) — previously known as Serps — to top up their income to a total of £270.15 a week. The poorest pensioners qualify for a baffling array of credits.

Now the Government wants to introduce a new, simpler state pension — a flat rate of £144 a week in today’s money. This will be brought in on April 6, 2016.

This means anyone who retires before then will receive the old state pension.

The new pension will require 35 years of NI contributions. And anyone who has built up state second pension top-ups will also keep these.

Because we are all living longer, the Government is also pushing back the age at which people can start claiming the state pension. For years, women could claim it at 60 and men at 65.

In the interest of gender equality, men and women will have the same retirement age.

Initially, the retirement age would have been equalised by 2020. But this has been brought forward to 2018.

The rise for women is being brought in through increments and has started already.

Women born between 1950 and 1953 have a different retirement age of between 60 and 65, depending on the date of their birthday.

For example, if you were born on January 3, 1952, you will qualify for a state pension on September 6 this year, aged 61 years, eight months and three days.

If you were born five months later on June 3, 1952, you’ll reach state pension age on July 6, 2014, aged 62, one month and three days.

Between 2018 and 2020, the Government then plans to increase the state pension age for men and women to 66.

This will affect people born after December 6, 1953.

The state pension age will move to 67 by 2028 and then rise in line with life expectancy. You can find out your retirement age at gov.uk or by calling the Pension Service on 08456 060 265.

THE 700,000 WOMEN WHO LOSE OUT

Though these reforms are intended to make the pension system fairer for men and women, there is a group of 700,000 women born between April 6, 1951, and April 5, 1953, who say they will lose out.

They are having to work longer than planned and will not qualify for the new higher state pension because they will retire before it is introduced in April 6, 2016.

Some may miss out by a matter of seconds. A woman born at 11.59pm on April 5, 1953, will retire on March 6, 2016, and — in today’s money — get the basic state pension of £110.15 a week.

Loser: But friend Denise MacGregor won't

However, a woman born at 12.01am on April 6, 1953, will retire four months later on July 6, 2016, but will, as a result, be eligible for the new payout of £144 a week.

Over a 25-year retirement, this amounts to £44,005 extra. Yet a man born on April 5, 1953, will get the new pension because he will not retire until he is 65.

It is a hard pill to swallow for those women who, unlike their lifelong friends, will be left high and dry.

Mrs Worsfold, Mrs MacGregor and Mrs Hull have stayed in touch with many of their classmates since leaving school at 18 in 1971.

‘Your friends at school are so important when you’re growing up that the close bond you form doesn’t ever really go away,’ says Mrs MacGregor.

‘You still have that same rapport you had in the classroom years later.

‘I still regularly see friends from school and now with Facebook it’s even easier to keep in touch.’

Mrs Worsfold will lose out on the new higher pension by just three weeks.

‘The Government marketed the new state pension as the best thing since sliced bread for women,’ says the teacher, who has two grown-up sons and lives with her husband Don, 68, in Birmingham. ‘Now they’re saying that most of this group of women will not get it.’

‘Not everyone has a husband who can support them if they defer receiving their pension. It’s like going back to the olden days when we were taught not to bother worrying about money because our husband would support us.’

Likewise, her friend Mrs MacGregor, who was born on February 8, 1953, will be deprived of the new state pension. For years she believed she would retire aged 60, which would mean she’d stop work this year.

Then she was told her retirement date would be when she was 61, and now it is January 6, 2016, when she will be 62 years, ten months and 29 days.

Mrs MacGregor, who has three sons and owned a software development business, says: ‘To be honest, I am slightly confused — the Government just keeps moving the goalposts about when I will retire.’

But Mrs Hull, a part-time teaching assistant who lives with her husband Michael in Leeds, will qualify for the new pension.

She was born on July 3, 1953, and will retire — aged 63 years, eight months and three days — on March 6, 2017. As this date is after the introduction of the new state pension, she will be eligible for the higher amount.

Mrs Hull, who has two grown-up children and is about to become a grandmother for the first time, says: ‘I admit I am one of the lucky ones. I feel so sorry for the others.

‘I thought that when the Government said they would change the date the new pension would come in that it would help us all — but it hasn’t.’ The women also complain that the goalposts for when they would retire were moved just a few years before they were led to believe they could claim the state pension — leaving them a painfully short time to prepare.

The Government argues the changes are fair because women will benefit from drawing their pension earlier than men born on the same day.

As a result, they will receive between two and four additional years of pension payments, worth an

 

extra £11,456 to £22,911.

But this still leaves a shortfall for those stuck in the old pension.

A woman retiring at 63 and living to 90 could be up to £47,525 poorer.

Even those women who have not built up the necessary 35 years of NI contributions may still be better off.

For example, someone who has made 33 years of contributions will get 33/35ths of the £144 weekly pension — £135.77. This is still £25.62 more than the old pension.

Anyone can buy extra years of NI contributions to plug gaps in their record. You need to do this within six years of the year you are paying for. So payment for the tax year 2012/2013 needs to be made by April 5, 2019.

The currently weekly rate is £13.55, so each missing year costs £704.60 if you pay by April 5, 2014.

SO WHAT CAN BE DONE?

No one who is set to miss out on the higher state pension can put off their retirement age in order to qualify. They can defer taking their state pension to receive a higher weekly payment — however, in reality most will be unable to afford to do this.

Many have already had to wait longer for their pension at very little notice.

Campaigners say that women should get the same deal as men. This would mean letting them retire as planned on the poorer state pension and then, when they turn 65, having the option of switching to the new pension.

‘It certainly doesn’t seem right that these women won’t get the same deal as men,’ says pensions expert Ros Altmann. ‘The problem is that if you allow women to retire now and then switch to the new pension when they turn 65, it will all get very complicated and costly.

‘And the Government has said it doesn’t want to spend any additional money introducing this new pension.

‘If it were up to me, I would have tried not to create such a cliff edge.’

A Department of Work and Pensions spokesperson says: ‘For women born before April 1953, being able to draw their state pension up to four years before a man of the same age means most will be thousands of pounds better off over the course of retirement.’