Ministers are considering changing plans to increase the state pension age to 65 in 2018 – and then 66 for all in 2020 - to protect a small group of women who face a sudden jump in their retirement age.
The plight of the retiring women is the subject of a growing backbench rebellion with more than 20 Liberal Democrat MPs objecting to the current plans.
Liberal Democrat MPs in particular were concerned about the impact on the 330,000 women born between December 1953 and October 1954 who would have faced the steepest rise in their pension age.
The Daily Telegraph has previously disclosed that the Liberal Democrats were negotiating a deal which could see all Britons retiring a few months later to fund a transition package for women.
Whitehall sources have disclosed that the issue is currently being debated between George Osborne, the Chancellor, and Danny Alexander, his Liberal Democrat deputy.
Despite a growing threat of a revolt, the Treasury is believed to want to press ahead with the plans.
“Any changes to the pensions system are extremely expensive,” one Whitehall source told The Daily Telegraph.
The Treasury had originally blocked a proposal to delay the rise for four years on the grounds of costs, but agreed after it was suggested that the move could be funded by adding four months on to the retirement age of all workers.
The move has prompted intense cross-party opposition amid warnings from MPs that it discriminates against those who will have to wait far longer than they had expected to receive their pensions
The Pensions Bill, which sets out the changes, will be debated for the first time in the House of Commons today.
The deal was thrashed out after the Bill, which contains legislation to raise the pension age in order to shield taxpayers from the costs of funding the retirement costs of an ageing population, was previously held up in the Commons.
It is thought that Iain Duncan-Smith, the Conservative Work and Pensions Secretary and Steve Webb, the Liberal Democrat Pensions Minister, are “sympathetic” to the arguments.
It is understood that options are being considered that could soften any impact to those women it affects most.
Whitehall source say one possibility is for increases in the pension age to be accelerated in order to ease the more immediate pain for women.
Women in their fifties would have lost out on as much as £10,000 over their lifetime, while delaying retirement by four months for all will cost each just over £1,000.
No men are facing an increase in their expected state pension age of more than a year, compared to about 500,000 women who are.
The previous Government had already decided that the state pension age would rise to 68 by 2046, and it is likely that this will happen even sooner than Labour anticipated as life expectancy increases.
Rachel Reeves, the shadow Pensions Minister, said: “It is simply wrong to punish women by moving the goal posts at this late stage.
“I’ve always agreed that the state pension needs to rise as people live longer, but these proposals unfairly hit women.
“There is strong and vocal opposition to these unfair pension changes across the UK.”
A Department for Work and Pensions spokesman said ministers intended to push through the Bill as planned and stand by the proposed timetable.
Article from The Telegraph