Ministers will extend full state pensions to 270,000 more women

Click to follow

About 270,000 more women will be entitled to the full basic state pension under the White Paper to be published by the Government next week.

John Hutton, the Work and Pensions Secretary, will say in a speech today that the Government will make the system fairer because many women miss out on a full pension because they give up work after having children and do not build up enough national insurance contributions.

Ministers are expected to announce next week that women who take a career break to look after children will in future require only 30 years' contributions to secure a full state pension, compared to 39 years at present. They also plan safeguards for people who care for sick or disabled relatives.

The Government has decided not to implement proposals to help women by a commission chaired by Lord Turner of Ecchinswell, the former CBI director general. It suggested that the state pension be based on a residency test rather than contributions and that all over-75s should receive the full amount regardless of their contributions.

Ministers believe the plan was unworkable because it would be difficult to prove the required numbers of years of residency. They say their proposals will help three times as many more women aged 50 and over than the 90,000 who would benefit under the Turner plan and that they were moving "further and faster".

However, Mr Hutton will insist today that the Government will "follow the Turner blueprint" in its White Paper. It has accepted his proposed trade-off under which the state pension will rise in line with earnings rather than prices but that people will work longer before they receive it.

The more generous annual increases will start after 2012, while the state pension age will rise from 65 in 2024 to 68 by 2050.

Mr Hutton will trumpet the White Paper as "the greatest renewal of the pensions system" since the post-war Attlee government implemented the Beveridge report. He will say that linking the pension to earnings will provide a simpler, more stable framework which will help to create "a new pensions saving outcome".

Only 14 per cent of women between 55 and 59 qualify for the full state pension. Although they can be compensated when they have a child under 16, the system is based on full tax years and it is inflexible when women move in and out of work. The new, more flexible mechanism will be based on weekly credits. Mr Hutton will describe it as a "modernised contributory principle".

The Equal Opportunities Commission said inequalities in the system meant that 2.2 million women were not accruing rights to the basic state pension and the average income of women in retirement was only 57 per cent that of men's.

Jenny Watson, the commission's chairman, will say at a conference in London today that the Government should carry out a Gender Impact Assessment of its forthcoming White Paper to make sure reforms helped younger women as well as those nearing retirement now. "A new solution for our outdated pensions system is welcome, and we look forward to the White Paper. But the test these reforms must pass is whether they will deliver a state pension that offers an adequate income in retirement for all women," she said.

Ms Watson said the system should recognise the vital unpaid contribution made by parents and carers. "Less than one in four recently retired women receive it today. These women, along with those approaching retirement, represent a huge proportion of the electorate, so no party can afford to ignore their concerns," she said.

Comments