Pensions shake-up unveiled

Details of a shake-up of the state pension have been unveiled by the Government. A single flat rate, equivalent to around £144 in today's money, is set to be introduced for new pensioners from 2017 in a bid to simplify the system.

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Millions 'set to lose out' over pension reform

Independent economists claim changes to the state pension, which were set out today by the Government, will hit more people than they will help. The self-employed and women who have given up work to raise families will benefit.

But the Institute for Fiscal Studies says millions of others will lose out. Our Political Editor, Tom Bradby, looks at the winners and the losers.

Government pension plans 'full of holes'

The Government has not been completely honest in today's announcement. The fact is that without additional money, our state pension system will remain completely inadequate.

Future pensioners have little chance of putting aside any money given our low wage economy or building up a decent company pension and will therefore have to rely more and more on the state system.

But even at today's prices, £144 a week still represents a state pension that is well below the official poverty line for older people.

– Dot Gibson, National Pensioners' Convention

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429,000 women among 'losers' of pension reform

Labour claims more than 400,000 women on the verge of retirement will miss out under the Government's pensions reforms. Shadow Pensions Minister, Gregg McClymont, said the plan would create "steep cliff edges and significant costs".

Even at my speed reading of today's White Paper there will be heavy losers, steep cliff ledges and significant costs if this proposal goes ahead. For example, the briefing from the Government over the weekend was at pains to emphasise the women-friendly aspect of these measures.

But can I ask you directly about the 429,000 born between 6 April 1952 and 6 July 1953? Is it the case that these 429,000 women will not qualify for the single tier state pension, yet men born (between) the same dates will do so? Is that the case?

Single state pension gives 'firm foundation for retirement'

More than 10 million people at work today are not saving enough to generate the sort of income they want to receive in retirement. A combination of a single, simple, decent state pension and the right to a workplace pension with a statutory contribution from their employer will mean - for the first time - there will be a firm foundation for retirement for the workforce of today.

– Steve Webb, Pensions Minister

Minister: Not a pension giveaway for the next generation

Outlining the pension shake-up in the Commons this afternoon the Pensions Minister, Steve Webb said:

The overall cost of the new system will be the same as the one it replaces. This is not a pensions giveaway for the next generation. A higher flat pension is only affordable because in the long term people will not become entitled to very large earnings-related pensions through the state system.

But in a world where everyone will be automatically enrolled into a workplace pension with a contribution from their employer it no longer makes sense for the state to be running its own, separate, earnings-related pension scheme.

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IFS: Younger generations lose out in pension reform

The proposed reforms would be a welcome simplification of the current rather complex rules, particularly in the short run, but they also imply a reduction in the state pensions that most people born after around 1970 can expect to receive from the state.

This cut in the generosity of pension benefits for currently young people will help reduce public spending on pensioners in the longer-run as pressures from an ageing population intensify. Reducing state support will also increase the incentives for younger cohorts to save privately for their retirement.

– Institute for Fiscal Studies
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