Approximately 300,000 UK women aged 60 in 2005-06 had some entitlement to basic state pension. Around 150,000 of these women had the number of qualifying years needed to earn a full basic state pension reduced by the operation of home responsibilities protection.
Notes:
1. Figures are rounded to the nearest 50,000.
2. Figures refer to entitlement based on women’s own contribution record.
3. Some women who reach state pension age in 2005-06 with some entitlement to basic state pension defer their entitlement and claim in a later year.
Source:
Lifetime Labour Market Database 2, 2003-04
The estimated net cost of reducing the number of qualifying years required for a full basic state pension to 30 for people reaching state pension age from 2010 is shown in the following table:
Estimated net cost 2010 0.0 2011 0.1 2012 0.1 2013 0.2 2014 0.2 2015 0.3 2016 0.3 2017 0.3 2018 0.4 2019 0.4 2020 0.5 2030 1.2 2040 1.7 2050 2.0 Notes: 1. Estimates are presented in £ billion, 2006-07 price terms. 2. Estimates of additional expenditure are consistent with the policy detail set out in the regulatory impact assessment accompanying the Pensions Bill. Net costs include savings seen from reduced expenditure on other income related benefits (pension credit, housing benefit and council tax benefit). They do not include any change in income tax revenue or national insurance. 3. Net costs assume the pension credit standard minimum guarantee is uprated by earnings from 2008. Net costs do not include the effect of direct reforms to the savings credit. 4. Costs or savings presented in the table are based on long-term projections of United Kingdom benefit spend, consistent with the pre-Budget report 2006. 5. Figures exclude the effect of raising state pension age. 6. Figures exclude the effect of personal accounts.
The estimates shown do not include any other reforms proposed in the Pensions Bill. For example, costs of uprating the basic state pension by earnings, or of the other reforms to improve the coverage of basic state pension, are not included.
The information is available only at disproportionate cost.
(2) what the net cost to the public purse would be of changing the number of years of national insurance contributions required to receive a full basic state pension for men to (a) 42 up to April 2010, (b) 38 up to April 2011, (c) 34 up to April 2012 and (d) 30 thereafter;
(3) what the net cost to the public purse would be of reducing the number of years of national insurance contributions required to receive a full basic state pension for women by three up to April 2007 and by one in each subsequent year until April 2013.
A key part of the Government’s package of proposed reforms is to make the state pension fairer and available to more people as soon as is practicable. This means addressing women’s lower state pension outcomes as soon as possible and is why we are planning to introduce the reduction in qualifying years for all those reaching state pension age from 2010. The effect of this is to ensure around three quarters of women reaching state pension age in 2010 would achieve a full basic state pension, compared to just 30 per cent. today.
This approach does however mean that two people with similar contribution histories reaching state pension age either side of 6 April 2010 will have their state pension entitlement calculated differently and this could produce different outcomes.
Changes could be made more gradually to avoid this situation, for example, by phasing in the reduction in years needed for a full basic state pension and we have explored different way to do this.
Smoothing the reduction of qualifying years from 2010 would delay the substantial improvement in women’s basic state pension outcomes for some years beyond 2010. Phasing the reduction in qualifying years before 2010 would give some women the advantage of both a lower state pension age of 60 and the benefit of these reforms. However the reforms are introduced there will be some people who reach state pension age on the wrong side of the chosen date or the series of dates chosen to phase in the reduction of qualifying years.
It is a difficult balance. Our intention in opting for a 2010 introduction is to improve the pension position of as many women and carers as possible and as quickly as possible while keeping the reforms within the fiscal envelope.
We are unable to provide the information in respect of the particular phasing options you have set out in the time available.