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UK pension plans change

People who are now in their fifties are the big winners from the Government plans. They will qualify more easily for a full pension and will get bigger increases in it each year

They will avoid further rises in the state pension age, the cuts in the state second pension as well as other subtle means of saving money that were also announced in the Government White Paper on pensions published at the end of May.

The best date of birth for a woman is probably April 6, 1950. Despite having a month added to her pension age, she will benefit from many changes to the qualifying conditions for state pension which will increase the pension many women receive.

For men the best date is April 6, 1947. They will benefit from the changed qualifying conditions, will see their state pension rise in line with earnings and will retire before the value of contributions to the state second pension is cut.

The news is worse for younger people. Anyone who is now 46 will have to wait until 66 to get their state pension. And the pension age will rise again to 67 for people aged 37 and will be 68 for people now aged 28 or less.

The big gap in the White Paper is that there is almost nothing of benefit for today’s pensioners or those who reach pension age before April 6, 2010.

It is widely accepted that older pensioners are poorer than younger ones and that among them women are generally the poorest of all. But the Government has not accepted recommendations to increase the pensions of people over 75.

There is also no mention of any one-off increase to the basic pension to recognise that it is now barely a fifth of average earnings and worth no more than 16 hours’ work on the minimum wage.

Although some will eventually benefit from the rise in the state pension in line with earnings, that will not start until 2012 at the earliest (it could be as late as 2015), so three million of today’s pensioners will not live to see it.

The value of pension credit will rise more slowly than it does now for those who get fairly small top-ups to their own income.

Written by Paul Lewis 

This article was created: 25 July 2006.
This article was last edited: 13 November 2006.

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