06 Apr, 2016
Pension reform will benefit women and self-employed
George Osborne, Chancellor of the Exchequer, said the government’s reforms to make state pensions simpler will benefit women and the self-employed mainly because it will give them greater security to plan their retirements, although some experts think it will be less generous to retirees in the longer term.
The adjustment to a flat-rate pension from the previous two-tier system, which is effective on Wednesday, will issue pensioners with £155.65 a week when they reach retirement age following 35 years of contributions.
Osborne said in a statement, “The new system means that at last, people will have certainty in what they can expect from the state in old age. These changes will benefit women in particular, with 3 million significantly better off by 2030”.
Osborne is trying to assure voters his pension reforms in the recent budget are aimed at the lower paid as well as the more affluent, after he was criticised for ditching plans to reduce tax reliefs on private retirement saving that would have hurt higher earners in his March budget.
Pollster BMG Research said Tuesday that Osborne’s approval rating had fallen following the budget, taking him considerably below the opposition Labour Party’s finance spokesman, John McDonnell.
The Institute for Fiscal Studies said that although the state-pension changes are “sensible,” 61% of pensioners in the next four years will get less than the new flat-pension rate as it is introduced. That’s because many won’t have contributed to the so-called additional state pension over the course of their working lives. Up to now, the additional pension provided extra income on top of a lower basic rate.
The IFS said in a statement, “It is also important to be clear that in the longer term, as well as achieving a genuinely simpler system, the new single-tier pension will be less generous, and therefore less costly to the taxpayer, than the system it replaces”.
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