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Friday, July 19, 2013

Will You Be Affected By Pension Changes?

Pension
Looking forward to a state pension when you finally retire is one of the few pleasures in life – and a special reward for those of us who are lucky enough to live in countries like the UK who have a social-system which takes care of the elderly. Sadly, things may soon be changing, in 2011 a new bill was passed which severely changes things for the future. We’ve decided to take a look at those changes and what they mean – but before that let’s take a look at how the government pension came about in the first place.

History of UK Pensions
Most people believe that state pensions originated after the Second World War, however this is not entirely accurate. The first government organised pension actually came about much earlier, in fact, earlier than even the First World War. Throughout most of British history it had actually been a a semi-criminal act to be ‘poor’ with people who couldn’t afford to pay for their food or lodgings being forced into workhouses or thrown in jail (known as Paupers Prison). Thankfully in 1908 Britain enacted the Old Age Pensions Act which gave 5 shillings a week to people aged over 70 years who did not earn more than £32 a year (in modern money that is!).

Not long after that Britain was thrown into the First and then Second World Wars, which left many people in a state of extreme poverty through no fault of their own. It was after this that the Welfare State was first established – in 1946 the National Insurance Act came into force and in 1948 the National Assistance Act was passed fixing our right to a state pension in law.  These acts then stayed mostly unchanged until the 1990s when the government passed the Social Security Contributions and Benefits Act which further protected the right to a state pension. Then in 2010 things started to change – and by 2011 the Conservative Government put into place the Pensions Act of 2011.

The Changes since 2011
In 2011 the new Pensions Act was put into place by the current Conservative government. This raised the age for receiving your pension due to a funding deficit in the treasury budget. This is an extremely strong change which means that many people will have to work longer into their old age than they planned for. The details of the changes are listed below.

From the 6th April 2010 the official age for being able to claim a state pension began to change. From 2011 the age for women will rise, in a stepped fashion, from 60 – 65 (by 2020) to bring it in sync with men’s pensionable age. This change will affect all women born on or after the 6th April 1950. After this, from 2024 onwards, the state pension age will increase from 65 to 66 for both men and women.
Further Changes

As well as all of the changes which have currently been put through there are also proposals for further changes in the future. Although these changes have not yet been voted into law there is a high probability that they will get voted through by parliament – which is mostly made up of old wealthy men who have little to no requirement for a pension and therefore don’t see the benefit of pensions to the rest of society. These potential changes are listed below.

The government currently proposes to have the initial changes implemented by 2018 rather than 2020. This would then lead to a change for both men and women to be completed by 2020 which is a huge 6 years ahead of the planned timescale. You won’t be effected by these new proposals if you are a woman born before 6th April 1953 or a man born before 6th December 1953. It is also currently under discussion if the pensionable age can be pushed up to 68 which means that on average you will have worked for 50 years before you’re allowed to finally relax. It’s a good thing governments have our interests at heart – wouldn’t you say?

Finally
Luckily none of these proposals have yet been voted through by the government and if current polls are to be believed it is unlikely that they will be voted back into power in the next election. Sadly this won’t stop the current changes which have already been voted through – so women will have to work an extra 5 years – although of course this means they at least finally get equality with men! The actual changes to the pension scheme aren’t as bad as we feared but they may be a sign of things to come – after-all, what’s the value of having a pension if you’re too old to use it by the time you receive it?

If you need help to find out what pension or benefits you're entitled to check out this handy Benefits Calculator which should help guide you to what you're currently entitled to.

I am a copywriter and poet with a bachelor’s degree in English Language and Creative Writing. I have worked in various marketing & creative roles since 2001. My aim is to publish at least one novel before I die – so far I have had 2 poems published internationally in print as well as some online. In my professional capacity I currently work for an advertising agency in London.
Richard Newman

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