Saturday, May 12, 2012
Looking after the carers
Today's Telegraph provides further evidence that despite all the Labour propaganda about the government looking after the rich, there are many measures being brought in for those who are less fortunate. The paper reports that the UK Coalition is proposing that millions of mothers who have chosen to take time out of work will no longer be
penalised once they are pensioners.
They say that at the moment, people who do not work for 30 years do not qualify for the full basic state pension. Under the reforms, mothers and carers will be treated as if they had worked throughout their lives, benefiting them by £2,000 a year:
Mr Duncan Smith said women would be the "major winners" in the reformed system, which will mean that everyone who works or looks after others will receive a flat-rate payment worth at least £140 a week.
They say that at the moment, people who do not work for 30 years do not qualify for the full basic state pension. Under the reforms, mothers and carers will be treated as if they had worked throughout their lives, benefiting them by £2,000 a year:
Mr Duncan Smith said women would be the "major winners" in the reformed system, which will mean that everyone who works or looks after others will receive a flat-rate payment worth at least £140 a week.
The measure will be applied to women who retire from 2015, giving an average
of £40 extra a week to mothers who took time out of work. Currently, they
receive a reduced entitlement for each year out of employment.
However, the changes will prevent people from "opting out" of the additional state pension and putting the extra money into a company scheme. They will not receive a discount in their National Insurance contributions, so the value of their pensions may fall.
Mr Duncan Smith defended the change, saying it would leave most workers better off and provide a far simpler system. He said the current system was "chaotic".
Nobody understands how it works," he said. "It acts as a major disincentive to save. It penalises women, just for doing the most important thing in the world, which is to make sure that their families (are cared for)."
The Government will publish the full details of the pension reform in the coming weeks.
However, the changes will prevent people from "opting out" of the additional state pension and putting the extra money into a company scheme. They will not receive a discount in their National Insurance contributions, so the value of their pensions may fall.
Mr Duncan Smith defended the change, saying it would leave most workers better off and provide a far simpler system. He said the current system was "chaotic".
Nobody understands how it works," he said. "It acts as a major disincentive to save. It penalises women, just for doing the most important thing in the world, which is to make sure that their families (are cared for)."
The Government will publish the full details of the pension reform in the coming weeks.
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I think I will first wait to see what the Institute of Fiscal Studies has to say about these claims. Experience teaches us this government is a bit creative e.g. using figures published by economic think tank NISER to contradict the Office of National Statistic on dismal GDP outcomes - despite the fact that the data was a month out of date.
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