Widows could lose their right to pension payments

Plans from the Department for Work and Pensions could see UK widows lose their right to pension payments, or survivors' rights.

Pensions minister Steve Webb has defended the move - the proposals do not cover those with defined pensions schemes not linked to salaries or public sector workers - on cost grounds. But it could leave many widows scraping by on state benefits.

After you've gone

The move seems to ignore any promise of pension protection, once promised. If it goes ahead, Steve Webb claims the money saved will mean some companies should be able to continue to offer final salary pension schemes to many private sector workers.

But the plans could also see the protection from inflation removed from certain 'gold plated' pensions, slashing the buying power of some pensions by more than 30%. A blow for those who save through their working life, only to see their scheme do away with any index-linking.

The plans could also involve a longer wait before retiring on a full pension.

"Final salary pensions have been in long-term decline and if we do not act they could disappear altogether," says Webb, defending the plans, quoted in the Telegraph. "Over time we hope employers will see they can pay salary-related pensions without all the risk, so we could see a renaissance in this space, but these things take time."

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Chipped away

Saga communications director Paul Green told AOL Money that it's better to have a pension than no pension. "If there are measures to halt this decline, that must be a good thing. It may be a question of no change or no pension. Neither are palatable, but a starving man will eat a piece of stale bread."

He added: "Ideally, companies should continue to offer generous final salary pensions, but not all of us can be civil servants."

The latest move on pensions follows the 2011 switch to the link with the Consumer Price Index (CPI) rather than the Retail Prices Index, chipping away the value of retirement income further. Aon Hewitt estimates pensions linked to RPI are worth 25% more at retirement.

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