Steve Webb: single-tier means a fairer deal for women
I am concerned that the recent article in Pensions Week claiming women could be losers under our proposed reform of the state pension is misleading.
In fact, the new system will have significant benefits for women. Our reforms will modernise the state pension system and mean that most women will qualify for a full state pension in their own right instead of having to rely on their husband or partner.
The new single-tier state pension will make clear what people can expect from the government and what they will need to save on top
The ability to derive or inherit a pension based on a partner or spouse’s contribution record was introduced as part of the post-war system to help women gain entitlement to state pension when men were assumed to be the breadwinners.
However, this old model no longer reflects the society in which we live. Women now account for just under half of the total UK workforce.
The figures quoted in the article do not reflect the position of women retiring today and in the future. As at February 2012, only 10 per cent of women aged 60-64 were in receipt of a married woman’s pension based wholly or partially on their husbands’ contributions, and this proportion is falling rapidly over time.
In addition, the number of qualifying years needed to get a full state pension was reduced from 44 years for a man and 39 years for a woman to 30 years for
everyone from April 2010.
This has already dramatically boosted the number of people, especially women, who will qualify for full basic state pension in their own right. In 2011, more than 70 per cent of women reaching state pension age were projected to have a full basic state pension. This is projected to increase to around 90 per cent by 2020.
Single-tier will build on these changes by providing a single, simple rate state pension set above the basic level of the means test that provides a firm foundation for saving.
Under single-tier most people will be able to qualify for a state pension based on their own contribution record, helping to reduce reliance on means-testing and provide a fairer deal for women.
Single-tier will replace the current system that has become so complex as a result of a series of piecemeal reforms made over recent decades, which mean many people have no idea what state pension they might get.
The new single-tier state pension will make clear what people can expect from the government and what they will need to save on top.
We will set out further detail on the single-tier pension in our white paper this autumn.
Steve Webb, pensions minister