Waspi women: threat of ‘financial ruin’ removed in judicial review case

The Women Against State Pension Inequality (Waspi) group has secured a legal safeguard in its fight against the government for compensation for the raising of their state pension age, as the High Court approved a limit on the campaign’s liability for Department for Work and Pensions (DWP) defence costs.

The DWP has agreed to a costs capping order, protecting each side in the event they lose their legal fight over increases to the state pension age. The agreement limits Waspi liability for government legal costs to £60,000, and caps the government’s liability for Waspi legal costs at £90,000.

Waspi women have welcomed the news as a “major milestone” in their fight to secure a more favourable government response to the Ombudsman’s compensation proposals for 1950s-born women. However, campaigners stress the order does not reduce the actual legal costs of the case, which will be much higher.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Angela Madden, chair of Waspi, said: “This agreement is a vital step forward in our legal campaign. Without this safeguard, we faced a real risk of financial ruin – of effectively being silenced by the threat of government legal bills running into hundreds of thousands of pounds.

“We now have the certainty we need to press on – but the costs of fighting this case remain very real. Our expert legal team is showing they can and do win victories against the government but it takes time and forensic presentation of our evidence – and that costs money.

“This is the fight of our lives – and we can’t win it without public support.”

Earlier this month, Justice Swift, a senior High Court judge ruled that Waspi case is “arguable” and “ought to be considered at a final hearing”, meaning ministers could be ordered to re-think their position on compensation if Waspi wins in court.

After years of campaigning by the Waspi group, the Parliamentary and Health Service Ombudsman (PHSO) ruled in their favour last year and called for compensation to be paid to the women. However, so far, the government has failed to commit to paying out.

The current Waspi judicial review will examine the government’s rejection of the PHSO’s recommendations for compensation – despite ministers’ acceptance that maladministration had occurred.

A DWP spokesperson said: "We do not comment on live litigation. We have apologised for there being a 28-month delay in writing to 1950s-born women. However, we do not agree with the Ombudsman’s approach to injustice or remedy and that is why we have decided not to pay compensation."

What is the Waspi campaign?

It’s been 10 years since the Waspi campaign group was set up to protest against the way changes to the state pension age were made.

From 2010 to 2018, the pension age for women gradually increased from 60 to 68, bringing it in line with men’s state pension age.

But the women affected by this - mainly those born in the 1950s - say the changes were implemented with little notice, leaving many in financial turmoil.

Waspi has repeatedly lobbied ministers, held protests, and even launched a judicial review over an ombudsman’s investigation into the way women were told about when they would receive their state pension. However, they have so far received no compensation.

The campaign group claims the “injustice” potentially affects 3.6 million women, and that since 2015, 380,000 Waspi women have died.

But could we see some progress this year? Last year an MP put forward a bill calling for a compensation scheme with payouts of at least £10,000 for affected women. But then there was a General Election. And when Labour got in, despite positive noises from Sir Keir Starmer in opposition, the government ruled out compensation. Hence Waspi women’s current legal fight with the DWP.

We outline the Waspi journey so far - and what could happen next.

What caused the Waspi campaign?

Until 2010, women could claim their state pension from age 60, and men from 65.

The government announced that women's state pension age would be increased to match men's, and would therefore raise their age from 60 to 65 in stages, between April 2010 and 2020.

It then sped up those changes, so that by December 2018 the age at which you could first claim your state pension was 65 for men and women. By October 2020 it was 66.

As well as the changes happening quickly, Waspi says the Department for Work and Pensions (DWP) failed to communicate them properly, so some women were completely in the dark. 

Many women made big life plans based on when they thought they were getting their state pension - which then proved to be wrong - leaving them in financial hardship as they waited extra years to receive their pension. 

Helen Morrissey, head of retirement analysis at the wealth manager Hargreaves Lansdown, comments: “This is a very difficult situation in that equalising state pension age for men and women is the right thing to do but it’s fair to say that many women were taken unaware of the change. The way government chose to communicate these changes has been criticised as it left many women with very little time to prepare for what became a gaping hole in their finances.”

While many MPs have supported the Waspi campaign, ministers have repeatedly ruled out any concessions, such as compensation to bridge the gap between the change in their state pension age or a one-off payment. 

The ombudsman’s investigation

The Parliamentary and Health Service Ombudsman (PHSO), an independent body that looks into complaints made to government departments or the NHS, investigated the way the pension age changes were introduced.

In 2021, during the early stages of its investigation, it said the DWP had “failed to make a reasonable decision about targeting information to the women affected by these changes. That was maladministration.” It also concluded the DWP had “failed to act promptly” to write to the women.

The PHSO finally concluded its investigation in March 2024 when it published a report finding the DWP guilty of “maladministration”. The ombudsman’s report found the DWP had failed to provide “accurate, adequate and timely information about areas of state pension reform”. It also stated its concern that the DWP did not acknowledge its failings or offer redress.

As such, the ombudsman has called on Parliament to secure funding for up to £10.5 billion. This would allow for a payout of between £1,000 and £2,950 for the women affected – though this is a far cry from the £10,000 some Waspi women were hoping for.

The PHSO said the DWP did not take action to ensure communications about the state pension age reached the right people, adding that a survey in 2006 showed that too many women still thought their state pension age was 60.

However, recommendations made by the ombudsman are not legally binding. It will be up to the DWP to decide if it will follow them; if it rejects them, the ombudsman could report to a parliamentary committee and ultimately there could be a parliamentary vote. 

Steve Webb, partner at consultants LCP and a former pensions minister, tells MoneyWeek: “The ombudsman’s role is to judge whether people lost out because of maladministration. He has been clear from the start of this process that he respects the rights of parliament to set state pension ages and cannot over-rule that power.

"Any recommendation therefore is likely to focus on potentially creating a very narrowly defined redress scheme which might apply only to those who were unaware of the changes to state pension ages at a time when the government should have done more to notify them and who lost out because of decisions taken in ignorance.”

For example, a woman aged 58 might have handed in her notice at work thinking she could have her state pension in 18 months’ time, only to find out she had to wait another three to four years – but then she couldn’t get her old job back and never worked again. According to Webb, her loss could be said to be a direct consequence of the maladministration.

However, he adds: “Creating such a scheme would be incredibly challenging and it is likely the DWP would fight such a recommendation”.

If there was a parliamentary vote, the fact there’s an election this year could work in the Waspi women’s favour. MPs wouldn’t want to be seen to vote against the ombudsman’s recommendation and harm their chances at the ballot box.

Having said that, setting up a compensation scheme could be delayed because of the election; it could easily be dragged into the next parliament. So even if redress looks like it might become a reality, it’s likely to still be a distant reality. 

Ros Altmann, a former pensions minister, says she hopes the issue “will not drag on much longer”. The baroness was repeatedly lobbied by Waspi during her stint as pensions minister in 2015 and 2016. Since leaving government she has spoken about the need to help women affected by the rapidly rising state pension age. 

Altmann tells MoneyWeek: “I had always hoped we could at least get help to the women who suffered hardship, those who made plans based on inadequate or misleading information and those who are caring for others with little or no income. 

“I fear this would not be acceptable to the majority of those affected, but if the ombudsman does recommend widespread compensation for everyone, then I would be delighted. But as I am one of those women I would not wish to accept anything myself as I knew about it.”

MP calls for £10,000 compensation

In February 2024 an MP put forward a bill calling for a compensation scheme for women born in the 1950s affected by the state pension age rise. 

Alan Brown, a Scottish National Party politician, said the government should give compensation payouts of £10,000 or more.

Speaking in the House of Commons as part of a 10-minute motion, he said: “These women were given the bombshell that their state pension age was going to increase from 60 to 66 just as they were about to retire and it was too late to do any proper financial planning.”

Brown added: “It’s hard to believe that almost three years after the maladministration assessment, a solution is still to be recommended by the ombudsman.

"It’s a scandal in itself that the Waspi women had to go to court to confirm the flaws in the second ombudsman report. This process should have been closed out a long time ago.”

He said that with regards to compensation, a minimum Level 5 banding of the Parliamentary and Health Service Ombudsman remedy scales should be applied but that a Level 6 band with payouts of £10,000 or more would be “most appropriate”.

Brown suggested that changing capital gains tax rates and non-dom tax status could be a way of funding the compensation scheme.

However, critics say a blanket payment scheme would fail to distinguish between people who knew their state pension age was going up and others who hadn’t been properly contacted by the DWP and had suffered as a result. It would also be incredibly expensive, running into billions of pounds.

Morrissey notes: “I also think the £10,000 figure would be seen as insufficient by many of the affected women who believe their loss to be much more.”

She adds that the government has always resisted the idea of paying compensation “and I would expect them to continue to do so. The workings of any compensation scheme could also be tricky – who would be eligible? Would it be all women in that cohort in which case the cost would be huge, or only those who had experienced the most financial hardship?”

The DWP says: “The government decided over 25 years ago that it was going to make the state pension age the same for men and women. Both the High Court and Court of Appeal have supported the actions of the DWP, under successive governments dating back to 1995, and the Supreme Court refused the claimants permission to appeal.”