Impact of the new single-tier State Pension

Older couple

In June 2013, Parliament started to consider the Pensions Bill, which sets out proposals for State Pension reform for people reaching State Pension age in the future. But what does the proposed new single-tier State Pension really mean, and how will it affect current and future pensioners?

The new single-tier State Pension

With the new single-tier State Pension, the aim is for everyone who has at least 35 years of contributions or caring to receive a pension of around £144 in today’s prices. However, people may receive more or less than this amount when we move to the new system.

Find out more about the proposals

Age UK supports the aims of a simpler pension, which provides a better pension for many women and low income workers. However, we believe that the proposals could be improved and we are very concerned that current pensioners are not included.

Some of the main issues are covered here and in the opens link in new window briefing we have produced for MPs discussing the legislation in Parliament.

How will new single-tier State Pension affect current and future pensioners?

I am:
A current pensioner
A future pensioner
A woman reaching State Pension age just before 6 April 2016
GOV UK website - opens link in new window I don’t know when I’ll reach State Pension age

A current pensioner

You will not be affected by the changes and will continue to receive your State Pension in line with existing rules. So, if you currently have a pension of less than £144, unfortunately you will not be able to receive more.

We know that many pensioners are disappointed to have been excluded from the new single-tier pension. Age UK is keen to see improvements for those people who have already retired.

1.7 million older people currently live in poverty and 1 million of these people are living in severe poverty. This is not good enough. We want the Government to set out a timetable and strategy to reduce and abolish pensioner poverty.

We also want the Government to extend the single-tier pension to current pensioners.

If you are a current pensioner and feel strongly about these issues, you could write to your MP.

Find out who your MP is 

If you need help with writing a letter or email, contact campaigns@ageuk.org.uk 

A future pensioner

Those who will benefit

Generally those who will benefit most from the single-tier State Pension will be people with low lifetime earnings and those who have time out the labour market due to unemployment, caring, or disability.

The single tier of around £144 would therefore be higher than they could expect under the current system.

The self-employed, who currently only build up entitlement to the basic pension, could also receive a higher State Pension.

Those who won't benefit

The Government wants the changes to cost no more than the current pension system so while some people gain others will receive less than they would have done had the current system continued – although there is protection for entitlements already built up.

Broadly speaking, we expect the groups who will receive less under the new system to include:

  • higher earners
  • people with less than the minimum number of contributions needed to qualify for any State Pension
  • some people who may be affected by the abolition of the Savings Credit part of Pension Credit
  • some people (mainly women) who under the current system would receive a State Pension on their partner’s record

If you are due to reach State Pension age after 6 April 2016 and will no longer be able to receive a pension on your partner’s contributions, find out what you can do about it by reading our briefing

A woman reaching State Pension age just before 6 April 2016

You are part of the cohort of women born between April 6 1951 and 5 April 1953 who aren’t eligible for the new single-tier pension, whereas men your age will qualify for the single tier.

Many, but not all, women in this situation would be better off under the single-tier pension system. Age UK believes that further consideration should be given to whether there should be specific measures for this group – for example giving them the option to be treated as a man with the same date of birth.

You could write to your MP about these issues.

Find out who your MP is 

If you need help with writing a letter or email, contact campaigns@ageuk.org.uk

Age UK’s view

Age UK supports the aims of a simpler pension, which provides a better pension for many women and low income workers. However there are a number of areas where we would like the Government to make changes to provisions set out in the Pensions Bill and where we feel more could be done to ensure particular groups of individuals are not penalised by the changes. To find out more, opens link in new window download our briefing


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