Most Britons will lose out in pension shake-up: New flat-rate payouts will mean majority get less, say experts



Biggest reform of the state pension since it was created

People will have to make 35 years of National Insurance contributions to qualify for the more generous retirement payments

By 2060 half of pensioners will be worse off

Women born between April 6, 1952, and July 6, 1953 will miss out



The majority of Britons will lose out in the long-term from a pensions revolution which could see the retirement age hit 77, it emerged last night.

An official analysis published yesterday admits 51 per cent of pensioners will get a smaller income by 2060 as a result of the change.

Under the shake-up, all Britons will get a ‘flat-rate’ pension worth £144 a week if they have at least 35 years’ of National Insurance contributions.

Shake-up: Pensions minister Steve Webb has told MPs the new system would be fairer and would encourage people to save for their retirement

'FURIOUS': HUNDREDS OF THOUSANDS WILL MISS OUT ON NEW PENSION BY JUST WEEKS

Suzanne Davey is furious that she and her husband will miss out on the new pension by a few weeks. Mrs Davey and husband Graham, from Devon, will both start claiming their pension in March 2017, just before the changes kick in in April.

She is one of 430,000 women who will miss out. She said: ‘I’m 60 in June which is when I would have retired originally, but the last government changed it by adding another three years and two months, and then this government came in and added another six months.’ Millions will benefit when the changes are introduced – particularly the self-employed and stay-at-home mothers – as ministers create a long-term system that the country can afford.

But many will also lose out – including many of those born after 1970 – because of the way the new payment is calculated.

The long-awaited shake-up comes into effect in April 2017 at the earliest and replaces the fiendishly complicated system which currently traps pensioners into the means-testing net to boost their pension income. The changes mean:

■ The State pension age will rise in line with life expectancy - which is likely to trigger a gradual increase in the age at which people can stop working;

■ Those who have already reached State pension age or are near to retirement will not benefit in any way from the reforms;

■ Nobody will qualify for a penny of the new flat-rate deal until they have worked in Britain for at least ten years;

■ Around seven million workers, mostly in the public sector, will have to pay higher National Insurance contributions;

■ In a further blow, hundreds of thousands of women coming up to retirement will not be eligible for the new flat-rate pension – although men who are the same age will be.

Ministers desperately want to convince up to 11million workers currently being signed up into a company pension scheme for the first time that they will end up better off if they save their own money, rather than rely on the state when they retire.

But – overall – the reforms will create more losers than winners, according to the official analysis in the White Paper, published yesterday.

In 2020, it predicts 14 per cent of Britain’s pensioners will be worse off ‘by more than £2 per week’, rising to 43 per cent by 2050 before reaching a majority of old people by 2060.

Yesterday the Institute for Fiscal Studies warned: ‘The main effect in the long-run will be to reduce pensions for the vast majority of people.’



It estimates that those who were born from ‘about 1970 onwards’ will be among the biggest losers. This is because, at present, millions of hard-working Britons get the basic State pension, currently worth £107.45 per week, but also get the additional State second pension to top this up.

The two will be merged to form one flat-rate payout, worth around £144 per week at today’s prices.

One of the biggest changes yesterday clears the way for the age at which people can start to claim their state pension to be dramatically increased.

Babies born this year may not get their state pension under the age of 77, according to a prediction by Raj Mody of accountants Pricewaterhouse Coopers.

Under the new system, the State pension age, which used to be 60 for women and 65 for men, will increase in line with life expectancy.



It is already scheduled to rise to 67 by 2028.

As a result, it will increase as a typical Briton lives for longer.



More than a third of babies born this year will live to celebrate their 100th birthday, according to the Office for National Statistics.

Under the system, the Government will review the State pension age every five years, and has promised to give a minimum of ten years’ notice before any change is introduced.

Pensions minister Steve Webb said they will try to maintain the proportion of a person’s life that he or she spends in work and the amount of time spent in retirement.

Mr Cameron was quizzed on ITV's Daybreak about the Daily Mail's revelation about the new flat rate pension system In a further blow, hundreds of thousands of women coming up to retirement will not be eligible for the new flat-rate pension – although men who are the same age will be. Around 430,000 women born in 1952 and 1953 will not be eligible for the new pension since they are due to retire before 2017, before the reforms come into effect. Men born during the same period, however, will qualify because their State pension age is currently 65. Shadow pensions minister Gregg McClymont said: ‘Ministers have been caught red-handed hiding the truth on pensions reforms. ‘Almost half a million women will be nearly £2,000 worse off compared with men, but instead of being honest with the women that will lose out this government tried to bury the truth.’ Changes to the state pension system