State Retirement Pensions

(asked on 3rd October 2019) - View Source

Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, what estimate her Department has made of the savings accrued to the public purse by the 2016 changes to the state pension system, specifically in relation to the inheritance of spouses’ state pension.


Answered by
Guy Opperman Portrait
Guy Opperman
Parliamentary Under-Secretary (Department for Transport)
This question was answered on 8th October 2019

The Government published an impact assessment ‘New State pension: impact on an individual's pension entitlement longer term effects’ in January 2016. This included impacts on derived entitlement to the State Pension. The estimates show around 2 per cent of men and 6 per cent of women reaching State Pension age between 2016-2020 were expected to receive less State Pension due to the withdrawal of derived entitlement. The proportion affected falls over the first two decades of the new State Pension. Further information on the impact of new State Pension reform on derived entitlement is available here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/491845/impact-of-new-state-pension-longer-term-reserach.pdf.

Information on the overall costs of the new State Pension (formerly the Single Tier) is available here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/311316/pensions-act-ia-annex-a-single-tier-state-pension.pdf

The cost estimates of the new State Pension do not provide a specific breakdown of savings from the inheritance of spouses’ State Pension.

The new State Pension was introduced for people reaching State Pension age from 6 April 2016 onwards to provide a clearer, simpler and sustainable system for the future and is based on an individual’s own National Insurance record. This both reflects changes in society where individuals are able to build a State Pension in their own right and a wider crediting regime that rewards periods of caring when people are away from the labour market. There is transitional protection of the old derived basic State Pension for women whose own contribution history was affected by taking the option to pay reduced-rate National Insurance contributions. Transitional arrangements also enable widowed people in certain circumstances to inherit all, or part, of the additional State Pension or Graduated Retirement Benefit they could have inherited under the old State Pension system.

A step-by-step guide to the changes to the rules on deriving and inheriting State Pension is available on the Government website at www.gov.uk using the search term 'state pension through partner'.

The transitional arrangements for the new State Pension have been designed to be to fair to the greatest number of people possible and to ensure that the vast majority of people have at least the full amount of new State Pension as quickly possible.

The new State Pension will benefit many women, carers and self-employed people, who historically often did less well under previous systems. For example, over three million women stand to receive an average of £550 more per year by 2030 as a result of the recent reforms.

In addition, we are committed to the triple lock for the duration of this Parliament. In April 2019, full amounts of the basic and new State Pensions increased by 2.6%, in line with average earnings growth. The full yearly rate of the basic State Pension is worth over £1,600 more in cash terms 2019/20 than it was in 2010.

Furthermore, Pension Credit provides a top up means-tested benefit for pensioners to protect those who are most in need.

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