Pensions explained

Context:
-People are living longer, increased government spending on pensions is seen as untenable for the future considering the current economic climate. The coalition argue that they will save £3.5bn a year for every year that the retirement age is raised.
-1 in 5 retiring in 2013 will be living below the poverty line.

Coalition:
-The coalition has introduced a new flat rate of £144 a week meaning thousands more will qualify including 85,000 women for the first time, overall 400,000 more people will be made eligible. Many support these changes including Age UK who see the simplification of the system as a merit. It is expected that money saved from cutting means testing and bureaucracy could be as much as £6bn.
-The coalition has phased out the default retirement age which is seen to help ageism as people aren’t expected to just retire at 65 but the British Chambers of Commerce, said such a policy would damage “businesses’ ability to manage their workforce”
-The state pension age for men is now due to rise from 65 to 66 from 2020, and to 68 by 2046. Women will move to a state pension age of 66 a few years after men. There were concerns that there wasn’t enough time for people to plan their finances ahead of the change as they would have to cover the short fall in delayed pensions
-Restored the earnings link for the basic state pension from April 2011, with a triple guarantee that pensions raised by the higher of earnings, prices or 2.5%