Five questions answered on new flat rate pension proposal

Who will benefit, and who will miss out?

The government plans simplify the pension’s system in what will be its biggest overhaul in decades. We answer five questions on the proposed changes.

What new flat rate are the government proposing?

Pensioners after the 6th of April 2017, when the new changes will likely to come into effect, will be paid a flat rate of £144, plus inflation rises between now and 2017. This effectively merges the state basic pension and the state second pension.

The current state pension is £107.45 a week. However, this can be increased up to £142.70 by applying for a pension credit and the state second pension.

Why has the government decided to make these changes now?

The coalition government believes the current system is too complicated and they say they want to simplify the system so people know what they will be paid when they reach pension age.

They government also believe that the one-and-a-half million pensioners who currently don’t claim pension credit they are entitled to will be paid what they are owed under this new system. 

Who sets to benefit the most from these changes?

Those who are self employed are set to benefit as they tend to get a lower state pension as they tend not to qualify for the state second pension. Women are also set to be better off.

As Chris Curry, from the charity the Pensions Policy Institute, explains to the BBC:

"So people who don't make enough contributions throughout their working life to, in particular, the state second pension, which includes people with intermittent work patterns, periods of low earnings and the self-employed," he said.

"So a lot of women will do better from this particular policy, as will people who are spending long periods of their career in self-employment."

Who might miss out on a full pension under the new system?

It is believed the government will announce that anyone who hasn’t paid National Insurance for at least 10 years will not get a pension. Also, those who have paid National Insurance for less than 35 years will have their pension reduced; a change from the 30-year threshold introduced a few years ago.

Also, the state pension age is rising to 66 for both men and women by 2020, with further plans for this to increase to 67 between 2026 and 2028.

What has the pension’s minister Steve Webb said about the proposed changes?

Webb told the BBC: "At the moment, nobody has a clue what the state is going to pay them," he told the BBC.

"We have a basic pension, a second state pension, a pension credit - it's fiendishly complicated. So we are proposing a simple system, not a more expensive one... that will help people plan for their retirements.

"Now, men and women will build up pensions in their own right. And women coming up to pension age who have got a damaged pension record, because they brought up children, will have that restored." 

"At the moment, nobody has a clue what the state is going to pay them" Photograph: Getty Images

Heidi Vella is a features writer for Nridigital.com

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Brexit is teaching the UK that it needs immigrants

Finally forced to confront the economic consequences of low migration, ministers are abandoning the easy rhetoric of the past.

Why did the UK vote to leave the EU? For conservatives, Brexit was about regaining parliamentary sovereignty. For socialists it was about escaping the single market. For still more it was a chance to punish David Cameron and George Osborne. But supreme among the causes was the desire to reduce immigration.

For years, as the government repeatedly missed its target to limit net migration to "tens of thousands", the EU provided a convenient scapegoat. The free movement of people allegedly made this ambition unachievable (even as non-European migration oustripped that from the continent). When Cameron, the author of the target, was later forced to argue that the price of leaving the EU was nevertheless too great, voters were unsurprisingly unconvinced.

But though the Leave campaign vowed to gain "control" of immigration, it was careful never to set a formal target. As many of its senior figures knew, reducing net migration to "tens of thousands" a year would come at an economic price (immigrants make a net fiscal contribution of £7bn a year). An OBR study found that with zero net migration, public sector debt would rise to 145 per cent of GDP by 2062-63, while with high net migration it would fall to 73 per cent. For the UK, with its poor productivity and sub-par infrastructure, immigration has long been an economic boon. 

When Theresa May became Prime Minister, some cabinet members hoped that she would abolish the net migration target in a "Nixon goes to China" moment. But rather than retreating, the former Home Secretary doubled down. She regards the target as essential on both political and policy grounds (and has rejected pleas to exempt foreign students). But though the same goal endures, Brexit is forcing ministers to reveal a rarely spoken truth: Britain needs immigrants.

Those who boasted during the referendum of their desire to reduce the number of newcomers have been forced to qualify their remarks. On last night's Question Time, Brexit secretary David Davis conceded that immigration woud not invariably fall following Brexit. "I cannot imagine that the policy will be anything other than that which is in the national interest, which means that from time to time we’ll need more, from time to time we’ll need less migrants."

Though Davis insisted that the government would eventually meet its "tens of thousands" target (while sounding rather unconvinced), he added: "The simple truth is that we have to manage this problem. You’ve got industry dependent on migrants. You’ve got social welfare, the national health service. You have to make sure they continue to work."

As my colleague Julia Rampen has charted, Davis's colleagues have inserted similar caveats. Andrea Leadsom, the Environment Secretary, who warned during the referendum that EU immigration could “overwhelm” Britain, has told farmers that she recognises “how important seasonal labour from the EU is to the everyday running of your businesses”. Others, such as the Health Secretary, Jeremy Hunt, the Business Secretary, Greg Clark, and the Communities Secretary, Sajid Javid, have issued similar guarantees to employers. Brexit is fuelling immigration nimbyism: “Fewer migrants, please, but not in my sector.”

The UK’s vote to leave the EU – and May’s decision to pursue a "hard Brexit" – has deprived the government of a convenient alibi for high immigration. Finally forced to confront the economic consequences of low migration, ministers are abandoning the easy rhetoric of the past. Brexit may have been caused by the supposed costs of immigration but it is becoming an education in its benefits.

George Eaton is political editor of the New Statesman.