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Universal state pension reforms delayed due to contracting-out

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  • Universal state pension reforms delayed due to contracting-out

UK - The UK government's green paper outlining proposals for a universal, flat-rate state pension has been delayed, as it has been unable to meet its end-of-year planned consultation on radical state pension reforms.
 
Earlier this year, the Department for Work & Pensions (DWP) said it would issue a Green Paper and consult on paying a flat-rate state pension of at least £140 a week to all new pensioners with a full National Insurance record.
 
Tom McPhail, head of pensions research at advisers Hargreaves Lansdown said: "The reform of the basic state pension is the mother of all pension challenges, so I am not surprised they are having to take their time over it."

On 16 November, Chancellor of the Exchequer George Osborne appeared to be committed to the idea of a flat-rate state pension.
 
In response to the Parliamentary question if he, as Chancellor, would commit to working closely with pensions minister Steve Webb in introducing the universal, flat-rate pension for all, he said: "Yes, absolutely. The Treasury is working with the DWP on potential pension reform that could simplify pensions and provide a boost to pensioners for many years to come."
 
Pensions experts believe the delay is due to problems surrounding the issue of contracting-out.
 
Ending the contracting out of state pensions would mean that public sector workers and employers, and those with private sector contracted out pension schemes, would have to pay the same rate of national insurance as everyone else. At the moment, these workers pay the so-called contracted-out rate, which is lower than the full rate.

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