- Special Pages
LONDON: Up to 400,000 more Britons will qualify for a new higher flat-rate state pension, the government said yesterday after it announced it would introduce the reform a year earlier than expected.
The Conservative-led coalition said the simplified scheme providing a flat-rate payment of £144 ($220) a week, would benefit low earners, the self-employed and women who have taken time out from work for childcare.
The change — one of the biggest overhauls of Britain’s pension system in decades — was expected to come into force in April 2017 but has been moved forward to April 2016, the government said.
The current system includes a basic pension, a second state pension and the ability to top up pension contributions with pension credits. This will all be merged into the universal flat-rate payment. Critics of the new scheme say Britons would have to work five years longer to qualify for a full pension — 35 rather than the current 30 — and end up with less than they get today.
The government has sought ways to stem the soaring cost of its universal basic pension provision — which is projected to hit 8.1 percent of economic output by 2060.
It has already said the pensionable age will rise to 67 for both sexes by 2028, from 65 for men and 60 for woman.
In a bid to try to force more Britons to start saving for retirement, the government has also introduced an “auto-enrolment” scheme, under which employees will be automatically enrolled into their company pension scheme or a state scheme, while having the choice of opting out.