Millions will lose out 


The National Pensioners Convention (NPC) says that millions of future pensioners will find out the government has short-changed them, and millions of existing pensioners will see their pensions rise by less each year as a result of unfair indexation arrangements. Based on Department for Work and Pension’s figures, the NPC reported in April 2016 that less than half those reaching State Pensions Age (SPA) shortly after 2016 would earn the full single-tier pension. In addition, its analysis of the figures shows that:


•  most people will lose out over the long term with less scope to build up a more generous state pension due to a cap of 35 years on accruing this benefit; 


•  for those that have been contracted out, two groups will lose out. Lower earners previously receiving a state pension top up will now pay higher National Insurance Contributions, seeing an equivalent reduction in take-home pay, but build up less state pension each year. Other losers include those whose starting amount on 6 April 2016 was less than £155 a week and who don’t have enough years left between now and SPA to make up the difference; and


•  hundreds of thousands of mainly women who were relying on getting a state pension based on their spouse’s contributions will no longer be eligible.


“The new state pension is absolutely riddled with complexity, confusion and essentially cost cutting," said NPC general secretary Dot Gibson. “By 2060, the state will be spending less on state pensions as a percentage of GDP than if we’d kept the old system.” 


She added: “The UK already has one of the least adequate state pensions in the developed world, ranked 32nd out of 34 OECD countries and now it’s going to get worse. The real aim behind this new system is to save money and to rely on the private pensions industry to fill the savings gap – but we all know that is a total fantasy. Our state pension system needs to be improved but this reform is taking us in the wrong direction.”


Teaching union NASUWT is also opposing the way the “hurdle” to qualify for the full state pension has been raised from 30 to 35 years. NASUWT national officer Dave Wilkinson told LRD that the changes have made it more difficult to accrue NICs for members of contracted-out schemes (see page 80) and many members who anticipated that they would receive the full state pension in April 2016 did not do so. 


“A lot of teachers are now vulnerable workers because they work intermittently, are employed with agencies or have not been in the teachers’ pension scheme for very long,” he said. “The state pension is, therefore, increasingly important for many NASUWT members – including those who may have had a lot of time off due to illness, disability or caring responsibilities. All these issues may have reduced their occupational pension and they are also receiving a reduced state pension.”


He added: “In addition to the group of women WASPI is campaigning for whose state pension has been delayed, the hurdles have been raised for a far larger group of women to be eligible for a full state pension. Around 75% of women are teachers and it is a very significant issue for many NASUWT members.”

More information on how the new State Pension is calculated is available at: www.gov.uk/new-state-pension/how-its-calculated