Is the new State Pension overhaul a step in the right direction?
A new flat-rate state pension to be paid to new pensioners reaching state pension age from the estimated date of 6th April 2017 was outlined by the Government yesterday. David Cameron spoke of his aim to simplify the system by merging the state second pension with the basic state pension in order to create one flat-rate payment.
The current state pension is currently £107.45 per week, although this can be topped up to £142.70 with pension credit or by the state second pension.
This three tier system has caused confusion among the general public as being unnecessarily complicated, therefore a simpler system is proposed to help people accurately plan for their retirement.
Importantly, David Cameron highlighted that the new system will benefit women, who have taken time out of work to care for their children, by restoring their pension record in the future. The self-employed are also likely to reap the rewards of the new scheme as they currently receive a lower state pension.
However, not everyone is set to benefit under the scheme, as the National Pensioners Convention has pointed out. They have highlighted that in order to benefit from the new pension scheme, pensioners will have to make national insurance contributions for 35 years, instead of the current 30 years.
This has led the Convention’s general secretary, Dot Gibson, to criticise the scheme and warn that ‘No one should be taken in by what is little more than a con trick.’
It seems that only time will tell whether the new state pension will be a step in the right direction for pensioners of the future generation.
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Employment Law
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Tom Moyes
