New pension 'fairer' for women

Press Association
'Lack of trust' in pension firms
'Lack of trust' in pension firms

The new flat-rate state pension will mean women are treated "as adults in their own right" when it is introduced in 600 days' time, Pensions Minister Steve Webb has said.

From April 6 2016, the new "simpler to understand" state pension will replace the basic state pension and the additional state pension.

The full rate of the new state pension will be set above the basic means-test level for pensions credit, which in 2014/15 is £148.35 for a single pensioner.

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'Women are winners'

The Government has said women will be among the main "winners" of the new system as the time they have spent out of the workforce raising and caring for their families will be better recognised.

It said around 650,000 women will receive around £8 a week more, amounting to an extra £400 a year, in the first 10 years, from the way their National Insurance contributions will be valued under the transition to the new system.

The Government said that around 80% of people reaching state pension age by the mid-2030s are expected to receive a full state pension, and even those who receive less than the full rate because of insufficient National Insurance contributions will in many cases be better off than they would be otherwise.

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Getting people savings

The changes are part of a raft of reforms to pensions, aiming to encourage people to start saving or save more for their retirement and also to give them confidence that it is worth saving.

Yesterday, the Pensions Regulator confirmed that four million people have now been placed into workplace pensions as part of the Government's landmark automatic enrolment initiative which started in 2012.

Mr Webb said: "At long last, women will be treated as adults in their own right when it comes to the pension system, rather than getting a reduced pension based on their husband's contributions.

"In the future, all years spent contributing to society, whether through paid work or caring responsibilities, will be of equal value.

"The new state pension will be a much fairer system and is designed to help groups which have traditionally been disadvantaged - including women and the low-paid - to build a strong financial foundation for their retirement.

"We are also helping more women to save for later life. Workers are now being automatically enrolled into workplace pensions - and millions of women will be saving for the first time as a result.

"The new state pension will be a clear improvement on the current system, removing layers of complexities. It's part of our work to abolish outdated inequalities and create a fairer society."

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