21.08.13
Pensions to leave private sector ‘worse off’
Thousands of private sector workers will be worse off under state pension reforms, trade union TUC has warned. A new report models the projected impact on workers when the new single tier pension comes into effect from 2016.
The research indicates that anyone with a long work history will lose out, with a person on £26,000 a year retiring in 2030 expected to receive £1,500 less each year in their pension.
The TUC wants the level of the state pension to be raised from £144 a week.
TUC general secretary Frances O'Grady said: “The state second pension was designed to give low and middle income earners a much-needed top up to the basic state pension.
“Scrapping it as part of the new single tier pension will mean that many low and middle-income private sector workers, particularly those several decades away from retirement, could be thousands of pounds a year worse off in retirement.
“While the Government is right to move towards a simple, single state pension,
setting it at just £144 a week is far too low and will mean many future pensioners will be worse off.
“The Government should raise the single tier pension rate, and look to raise minimum contribution rates into workplace pensions once auto-enrolment has had time to establish itself, so that fewer people lose out under the Government's pension reforms.”
A spokesman for the Department for Work and Pensions (DWP) said: “The flat rate will provide a fair base, set above the basic level of means test, helping people to know how much they need to save for the kind of retirement they want.”
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