The Quickie

A bite-sized look at this week's news…

Posts Tagged ‘Baroness Patricia Hollis’

Patricia Pleased with Pensions

Posted by allie1985 on October 28, 2008

Since the 1990’s Baroness Patricia Hollis has been campaigning for women to get a better deal on pensions.

Last week she finally got her wish.  The government have amended a bill to let women buy back their missing National Insurance payment years.

She said: “It’s really good news. Women too often have to choose between looking after themselves and looking after their family. “By enabling them to buy back their missing years they can now recover some of their lost pension”

“Other groups which could benefit include people who are self-employed and those who took time out to be a student or to go abroad”

However the Baroness does point out that the Government improvements could make a few women worse off

“It only makes sense if you have at least 20 years of contributions already or you could be better off on the married woman’s stamp or with pension credits.”

This is an important move as currently only 35% of women receive a full state pension.

 History 

Previously ministers had rejected Hollis’s campaign and refused to let women improve their pensions by allowing them additional top ups. They were allowed to ‘buy back’ up to six years but that was as far as the Government would go to improving the situation.

However last week James Purnell, secretary for work and pensions,  decided to amend the new Pensions Bill to enable all people to buy back another six years. That makes a total of 12 years that people can buy back.

 Improvements to the bill 

The bill is set to be debated in the Lords next week and includes other improvements for women’s pensions.

A new system of NI credits is to be set up. This will recognize the value in unpaid work caring for children, elderly relatives and the disabled. People who do these jobs will be credited just as those with normal paid jobs are.

By 2010 the amount of contributions needed to be made by people to receive the full state pension will also be decreased. It is currently set at 39 years for women and 44 years fro men. Under the new law, both will be decreased to 30 years.

 BBC Article 

Main article

Alexandra Murphy

(alexandra.murphy@my.westminster.ac.uk)

 

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Extra pensions-but who benefits?

Posted by allie1985 on October 28, 2008

Nearly half a million people are being given the chance to buy back 6 years of National Insurance contributions to increase their state pensions.

90% of which are women.

However the government minister in charge of the project believes just 110,000 people will apply.

She also confirmed that the price of contributions will be increased.

 What this means

At the moment only 35% of women receive the full state pension.

Under current law to receive the full amount women need to have made 39 years of NI contributions, for men it is 44.

The majority of women fail to meet the required 39 years due to time off for raising children, and looking after elderly and sick relatives.

Under the new scheme the number of years of contributions a woman needs to make will be cut from 39 to 30.

They will also have the option to buy back another six years worth of contributions.

Although this only applies to people who have made over 20 years of payments.

 Who this affects

This change in law applies to both men and women who reach he state pension age between April 6 of this year and April 5 2015.

This deal does not help those who retired before this period.

 In Simple terms

According to the Daily Mail,

“The change in the qualifying period essentially means that a woman retiring on April 6, 2010, with 30 years’ contributions would get the full basic pension of £87.30 a week but prior to today’s announcement one retiring just a day earlier would get only £67.23 a week”

 The costs

It currently costs £420 per year to top up NI credits.

The cost is set to rise, but it is not yet known by how much. This is in order that the cost to the government remains “neutral”.

Rosie Winterton, the Minister for Pensions said “We have to draw the line somewhere and balance the need for individuals with the need not to draw enormously on the public purse”

 Is it worth it?

According to Baroness Patricia Hollis

“It represents a very good buy indeed”

“If you took out a loan at 7% at the point of retirement for those six years and you paid it back over five years, even while you were paying it back you would make a modest profit of £2 or £4 a week and after five year you would be absolutely in hand”

 DWP link

Background piece

Alexandra Murphy

(alexandra.murphy@my.westminster.ac.uk)

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