Wednesday, 30 September 2015





Only one in four women who qualify for the new state pension in 2016/17 will get the full amount, which will be at least £151.25 a week. New figures show that out of 80,000 women reaching state pension age in 2016/17 only 20,000 (25%) will get the full rate or more. But 60,000 - three out of four (75%) - will get a much reduced pension. In many cases it will be the same as they would have got under the old state pension scheme - which by then will be around £119 a week.

The figures for 2016/17 are better for men - but not much. Just over four out of ten - 41% - will get the full new state pension or more. The rest - nearly six out of ten - will get a much reduced pension similar to that paid under the old system.

The Department for Work and Pensions has resisted publishing a gender breakdown for the early years of the new pension. It took a Freedom of Information (FOI) request to get any figures. And they still did not reveal the proportion of women and of men expected to get less than the full amount. When I requested these figures I was told "These figures aren’t in the public domain, but you could FOI."

However, it then emerged that the gender breakdown of those reaching state pension age up to 2033/34 had been published in 2013 - by the DWP! Those figures are out of date but unlikely to have changed significantly. Combining the two sets of data showed that the discrimination against women would continue to 2033/34 at least when 21% would get less than the full pension compared with only 15% of men.

In the first five years of the scheme, 2016/17 to 2020/21, 680,000 women will reach state pension age but only 250,000 (37%) will get the full new State Pension and 430,000 - nearly two out of three (63%) - will get less . For men the figures are 1,280,000 reaching pension age and 610,000 (48%) who get the full new State Pension and just over half (670,000 or 52%) will get less than the full amount. There are fewer women reaching state pension age than men because over that period their state pension age is raised at an accelerated rate to equalise it with men's. 

The table shows the new State Pension year by year the number and percentage of men and women who will get less than the full amount.

These calculations are based on figures from the stated sources. The DWP says the 2013 estimates are out of date. But it will not provide updated ones so I have had to put in a Freedom of Information request. When I get the updated figures this table will be updated too.

People will get a reduced new state pension for two reasons.

First, in its early years the new state pension will be reduced for time 'contracted out' and paying into a private or company pension. For many people that will reduce the amount of the new state pension to less than they would have got under the old system. In those cases they will get the pension they would have got under the old system. Hence the large number who have no more than the old pension.

Second, the new state pension requires 35 years' National Insurance contributions to get a full pension. The old pension only needs 30 years. It will be harder for women than men to achieve this number.

14 October 2015
vs. 1.02

Sunday, 20 September 2015


This paper was written in October 2015 and is now out of date. The Government did not use any sleight of hand on the 2016 pension rates. They are set out in my uprating blog

Is the government planning to save money by changing the rules and trimming the new state pension by more than £3 a week?

Under the current triple lock rules the basic state pension - paid to those who reach pension age before 6 April 2016 - will rise by prices, earnings, or 2.5% whichever is the highest. Prices are measured by the September CPI to be published on 13 October. The most recent CPI was 0.0% and the next one is expected to be much the same.

The earnings rise is measured by the annual increase in pay across the whole economy from May to July 2014 compared with the same period in 2015. The final revised figure is published on 14 October. The preliminary May to July figure was published last week and showed an annual rise of 2.9%. If the final revised figure remains above 2.5% then under the triple lock that will be used to increase the basic state pension from April 2016.

A 2.9% rise would mean the basic state pension increased by £3.35 from £115.95 to £119.30 a week. That is not under threat.

Setting the new state pension
But the level of the new single tier state pension is more doubtful. It will be paid to people who reach state pension age from 6 April 2016 and will be considerably higher than the old basic state pension. One of its purposes is to reduce the number of pensioners who need means-tested benefits. So it will be set above the current level where means-tested help is paid.  

Pensioners can currently get a means-tested benefit called pension credit if their weekly income is below a certain amount. If it is below what is called the guarantee credit then their income is made up to that figure. For the last four years the guarantee credit has risen by the same cash amount as the basic state pension. So this year when the state pension rose by £2.85 to £115.95 the guarantee credit rose by the same cash amount to £151.20.

The new state pension will be higher than the guarantee credit paid in April 2016. If the existing rules were followed then the guarantee credit would be raised by the same cash increase as the basic state pension. Adding £3.35 to £151.20 would raise the guarantee credit to £154.55. And so the new single tier state pension would have to be at least £154.60 a week.

But could the Government be about to change those long established rules? The rise in the current basic pension is protected by the triple lock agreed by the current government for the rest of this parliament.

The previous coalition government raised the guarantee element of pension credit by the same cash amount as the basic state pension. Under the law the guarantee credit has to rise with earnings. But because earnings rises were low it took the view that it would raise the guarantee element by more than the law provided for.

This government has never stated its policy on the guarantee credit. And it has decided that other means-tested benefits are either frozen or set to rise with inflation - which with the CPI currently at zero is the same thing. So the government could decide to freeze the guarantee pension credit at its present level of £151.20 for 2016/17. That would require a change in the law (specifically the Social Security Administration Act 1992, s.150A). If it took that course of action the new single tier state pension could be just 5p higher at £151.25 and still fulfil the pledge that it would keep most new pensioners off means-tested benefits.

A new attempt by DWP to explain the new state pension uses that figure in its explanation.

That would mean an effective £3.35 cut compared with the level of the new state pension calculated under current rules.

It would not break any guarantees given by this government. It would go some way to answer the critics who say all the cuts are currently being borne by younger households. And it would contribute hundreds of millions of pounds savings to help deliver the £20 billion cuts which the Government says are needed to balance the budget by 2019/20.

The actual level of the basic state pension, pension credit, and the new single tier pension will be announced with or shortly after the Autumn Statement, expected on 25 November.

11 October 2015
vs. 1.03