Only one in three will get the full £148 flat-rate state pension in 2016.
According to a report by Money Mail, only 222,000 of nearly 600,000 people who will reach state pension age in the 12 months from April 2016 will be able to claim the full amount.
New government figures showed that 100,000 fewer than expected will get the £148 per week sum in the first ten years of the flat-rate system according to the Daily Mail, who write:
It is a new blow to a generation of savers who were told everyone would get the flat-rate pension if they had paid their National Insurance contributions.
Malcolm McLean, senior consultant at actuarial firm Barnett Waddingham, says: ‘Some politicians, who should have known better, said we would have a more generous and simpler flat-rate pension scheme,
‘Clearly, the new deal is neither of those things, at least not in the early years. It is unfortunate this has not been properly explained and expectations have been raised that can’t be fulfilled.
‘Many of the people affected will be extremely disappointed. The fact is it will take ten or maybe even 20 years for things to even out and for most pensioners to receive the full flat-rate pension.’
The new state pension was unveiled as a way of ending the unfairness and complexity of the current system.
The Government promised that anyone who had 35 years of National Insurance contributions would qualify for the full £148.
And in 2013, Work and Pensions Secretary Iain Duncan Smith said: ‘The single-tier pension will mean people have certainty in what they can expect from the State. Thirty-five years’ worth of National Insurance contributions will mean a full basic state pension.’
However, Money Mail reported in May last year this would not be the case and hundreds of thousands would lose out.
The problem generally affects employees, who, at some point in their working life, opted out of receiving extra benefits such as the state second pension. In exchange, they were allowed to pay a reduced rate of National Insurance. This was called contracting out.
Typically, they had generous final salary pensions. However, some workers in stock market-linked company pensions were also encouraged to contract out.
Now the Government has decided because they paid lower NI contributions and are likely to have built up extra pension elsewhere, they should lose some of their new state pension.
Following the Money Mail probe, former pensions minister Steve Webb apologised and admitted only 42 pc of those retiring in the first year of the flat-rate pension would get the full payment.
This data given to us in June last year projected the number of pensioners who would qualify for the full amount every year until 2040.
It revealed that only from 2018 would more than half of new pensioners receive the full amount.
But current pensions minister Baroness Ros Altmann has revealed this estimate was too high.
We have seen Department for Work and Pensions figures which show just 37 per cent will be able to claim the full amount, meaning 30,000 more than first thought will not.
In the third year of the new state pension, the Government had estimated 52 pc of savers would qualify for £148 a week. Now it says the figure will be just 46 per cent, meaning an extra 36,000 who retire from April 2018 will not get the higher rate.
In total, between 2016 and 2026, 102,000 extra savers will miss out.
Continue reading here
Latest posts by Carol Adl (see all)
- UN Passes Resolution Urging Israel To Leave Syria’s Golan Heights - December 3, 2016
- Russian Bomb Disposal Unit On The Way To De-Mine Aleppo - December 2, 2016
- ‘Alarming’ Number Of Children Missing From British Care Homes - December 2, 2016