Budget 2013: Extra 400,000 to be eligible for a revamped state pension

New flat-rate state pension is worth £144 a week

Some 400,000 more people will be eligible for a revamped state pension after Chancellor George Osborne brought forward the start date by a year to April 2016.

The commencement of the new flat-rate state pension, worth £144 a week, means that thousands more people reaching retirement in three years’ time will qualify for the pension, including around 85,000 women who would have missed out during changes in qualification ages.

But the measure, which had been trailed ahead of the Budget, was met with concern from pension fund administrators that firms may struggle to meet the new deadline to adopt the reforms and provoke a fresh round of closures of increasingly-rare final salary schemes.

Mr Osborne insisted that the reforms, which will see the weekly income of those who qualify rise from £107 to the new rate, would give employees a “fair deal”.

The Chancellor said that an employee who is 40 years old when the single tier pension comes into force and who has always opted-out of the optional second state pension will pay an extra £6,000 in National Insurance over the rest of their working life but would get an extra £24,000 in state pension during retirement.

Pensions experts said the measures, which will coincide with the introduction of automatic enrolment in workplace pension schemes, meant the additional burden of National Insurance contributions for employers and employees alike could force the closure of final salary schemes.

The reforms spell an end to “contracting out” in occupational pension schemes under which employees and employers in final salary pensions could opt out of the second state pension and make reduced National Insurance contributions.

Joanne Segars, chief executive of the National Association of Pension Funds (NAPF), said there was a risk that the changes could damage company pension schemes.

She said: “This is a very tight timeframe and we question whether it can be delivered. Schemes need flexibility and time to adapt. If the Government gets it wrong then it risks sparking a fresh round of final salary pension closures in the private sector.”

Case study: The fiftysomething

Ian Barnett, 57, of Barrowford, Lancashire: "I retired from the health service at 50 and have been looking for a new job for two years. I'm already in line to receive a private pension but I'm happy to hear the flat-rate pension has increased. I welcome the promise of 600,000 more jobs in the private sector, but I would have liked to have seen it targeted more towards the old and the unemployed."

Suggested Topics
Sport
The sun rises over St Andrews golf course, but will it be a new dawn for the Royal and Ancient Golf Club?
sportAnd it's Yes to women (at the R&A)
Sport
Yaya Touré (left) and Bayern Munich’s Spanish defender Juan Bernat
footballToure's lack of defensive work is big problem for City
Arts and Entertainment
Liam Neeson said he wouldn't
tv

Liam Neeson's Downton dreams

Arts and Entertainment
A spell in the sun: Emma Stone and Colin Firth star in ‘Magic in the Moonlight’
filmReview: Magic In The Moonlight
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
Wembley Stadium
footballNews follows deal with Germany
Voices
voicesApple continually kill off smaller app developers, and that's no good for anyone
Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear
tv

Thriller is set in the secret world of British espionage

Sport
A 'Sir Alex Feguson' tattoo
football

Life and Style
life

News
ScienceGallery: Otherwise known as 'the best damn photos of space you'll see till 2015'
Life and Style
fashion

Bomber jacket worn by Mary Berry sells out within an hour

Sport
Andros Townsend is challenged by Vladimir Volkov
football
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Volunteer your expertise as Trustee for The Society of Experimental Biology

Unpaid Voluntary Position : Reach Volunteering: Promising volunteer Trustee op...

Email Designer

£30000 - £35000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Psychology Teacher

£110 - £130 per hour: Randstad Education Reading: Psychology Teacher needed fo...

Food Technology Teacher

£85 - £120 per day: Randstad Education Cheshire: Randstad Education are curren...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week