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Coalition Pensions Minister Steve Webb Says Most Pensioners 'Will Be Better Off' After Reforms

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STEVE WEBB
Lib Dem minister says coalition is doing 'the right thing by today's workforce' | PA

Most people reaching state pension age in the coming 40 years will receive a higher pension over their retirement due to planned reforms of the system, the Government maintained today.

Ministers said an assessment of the proposals also showed that more than half of over-25s will receive more state pension income during retirement than they would under the current system.

Experts warned the Government on Monday, when it published a White Paper, that the vast majority of people would be worse off under the pensions shake-up.

The respected Institute of Fiscal Studies said the main effect in the long run will be to reduce pensions for the vast majority of people, while increasing rights for some particular groups, notably the self-employed.

But the Government said that in the 2020s, three-quarters of all new people retiring will receive a higher state pension and in the 2040s around two-thirds will be better off as a result of the introduction of a single-tier pension.

Pensions Minister Steve Webb said: "We're doing the right thing by today's workforce with our reforms. The majority of over-25s will get more, not less, income during their retirement under single-tier.

"We're also doing the right thing by younger people, giving them a simple, clear state pension, and the right to a workplace pension on top, with a contribution from their employer and the Government."

The reforms, planned for April 2017 at the earliest, will particularly benefit women taking time out to bring up a family, low earners, and the self-employed whose National Insurance contributions will count for the first time towards a full single-tier pension of £144 a week, said the Government.

Ministers added that without the reforms, spending on state pensions and pensioner benefits will rise from 6.9% of GDP (economic output)in 2012/13 to 8.5% in 2060/61. The changes mean the increase will slow to reach 8.1% in 2060, ensuring the state pension remains "sustainable for future generations", said the Government.