12 Days Remaining

Tuesday 13th
posted by Richard Bagley in Britain

GOVERNMENT spin on the new “flat-rate” state pension unravelled yesterday after it was confirmed that millions would not qualify for the full payment.

Freedom of information requests showed that less than half would get the headline £148.40 a week touted by the government.

National Pensioners Convention spokesman Neil Duncan-Jordan said that many women and those who opted out of the old state second pension (Serps) faced getting less than ministers had suggested.

He branded the new scheme a cost-saving “con sold to people on the basis it was going to be better than the old system.

“All the evidence shows that very few people will be better off.”

Lib Dem Pensions Minister Steve Webb acknowledged earlier this year that the government had “oversimplified” the scope of the new pensions.

He was forced to backpedal following Tory boasts that the policy would deliver a major boost for the country’s retired.

Official figures revealed yesterday by pension firm Hargreaves Lansdown showed that only 45 per cent of people reaching pensionable age between 2016 and 2020 would receive the full £148.40.

By 2035 that proportion is expected to rise to 81 per cent.

The majority of people falling short of the full state pension are likely to have either been contracted out during their working lives or have interrupted National Insurance contribution histories, such as mothers and the self-employed.

Mr Duncan-Jordan said it was a “Lib Dem policy” that the Conservatives had backed only because it would cost less.

“Steve Webb managed to get it through because it actually saves money in the long term as a percentage of GDP,” he said.

“In 50 years’ time the new scheme is cheaper than the old scheme.”

The NPC has called for a universal “citizens’ pension” of £175 a week with any excess earnings clawed back from the richest pensioners via tax.

That’s “the only way you’re going to help millions of older women who for whatever reason didn’t pay in National Insurance,” explained Mr Duncan-Jordan.

“If we’re unhappy about unfairness we should talk about using the taxation system to redistribute.”

The flat-rate scheme will replace the current web of basic state pension and means tests from April 2016.

Labour shadow pensions minister Gregg McClymont, whose party voted for the change, said “ministers have failed to be honest.”