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Daily Mirror
4 days ago
- Business
- Daily Mirror
State Pension's future under review amid retirement shake-up
The State Pension is facing a dramatic overhaul under a Government shake-up of retirement rules. The changes could see millions of future retirees having to wait longer to claim and receiving different levels of payment. Ministers have launched a wide-ranging review of the entire pension framework – looking at when people should be entitled to receive the state pension, how much they should get, and whether the current system is financially sustainable for the long term. The Department for Work and Pensions (DWP) confirmed that the second phase of its Pensions Review will examine 'the balance of all three pillars of the UK system – state, occupational and personal wealth'. It is expected to ask fundamental questions about how these components should work together to ensure a financially secure retirement for everyone. Full details and the panel leading the review are yet to be published. The review comes at a time of growing concern that the triple-lock guarantee – which ensures the state pension rises every year in line with wages, inflation or 2.5%, whichever is highest – is pushing up pension payments at an unsustainable rate. Rachel Vahey, head of public policy at AJ Bell, said: 'Pensions minister Torsten Bell recently ruled out scrapping the triple-lock guarantee, but as the state pension grows ever closer to the frozen personal allowance threshold it could be that the Government is finally forced to address the question of how much the state pension should really offer, at what age, and how it can increase payments sustainably each year.' The announcement comes hot on the heels of a new Pension Schemes Bill, which lays the groundwork for major changes, including the creation of massive collective investment funds – dubbed 'megafunds' – to deliver better returns for savers. Ms Vahey said the review could be the most significant shake-up since the Turner Review 20 years ago, which brought in automatic workplace pension enrolment and transformed saving habits in the UK. 'It's now 20 years since the Turner Review was published,' she said. 'That comprehensive look at the UK's retirement system ushered in a new regime for pensions, resulting in the introduction of landmark automatic enrolment reforms which changed pension saving in the UK forever.' Those reforms have seen more than 11 million people newly enrolled in workplace pensions since 2012, bringing the total number of active savers to around 20 million. But experts warn that while the number of savers has surged, many still aren't putting enough aside for a comfortable retirement. Ms Vahey said: 'Not enough people are saving enough money for their later life, and although automatic enrolment has gone a long way to create millions of new pension savers, instead of resting on our laurels we now need to take a good look at whether they are saving a sufficient amount of money to realise their retirement ambitions.' The review is also expected to probe the interaction between the state pension and private savings – including personal assets – raising questions about whether those with higher wealth might ultimately be expected to rely less on the state. Ms Vahey added: 'While details of this new Pension Review are thin on the ground at this stage, it has the potential to be as significant and could have far-reaching implications for people saving for their retirement.' Campaigners are urging the Government to set out full terms of the review as soon as possible to give millions of savers clarity on what's coming. Ms Vahey said: 'The Government now needs to clearly set out the terms of this review as soon as possible to give savers and the industry certainty over its plans.'
Yahoo
25-04-2025
- General
- Yahoo
How to check if you're eligible for state pension back payments
Tens of thousands of people have now been identified as having been underpaid more than £800m in their state pensions because of historical government errors. New figures show that as of 31 March, the Department for Work and Pensions (DWP) had identified 130,948 underpayments, with a total £805m owed, as part of a checking process which began in 2021. Rachel Vahey, head of public policy at AJ Bell, said it is "one of the biggest benefit scandals of modern times" and "it is absolutely critical all those affected by this scandal receive the money they are owed as quickly and efficiently as possible". Those affected by the errors include: married women on low state pensions whose pension was not automatically uplifted when their partner retired (owed an average of £5,553) people whose pension was not automatically reassessed on the death of their spouse (owed an average of £11,725) over-80s whose state pension entitlements were not automatically increased (owed an average of £2,203) Here, Yahoo News UK sets out how to check if you're eligible for state pension back payments. Anyone who has reached state pension age: which can be calculated on the government's website here. The amount of state pension a person receives depends on how many "qualifying" years of national insurance payments they have. The DWP has said it has "completed the vast majority of cases in the exercise as planned, with a small number of outstanding cases due to further documentation needed from the customer". Lane Clark & Peacock, which specialises in pensions advice, says: "Some married women, widows and those aged over 80 should get payments without having to take any action. "But other groups, such as married women whose husband turned 65 before 17 March, 2008, and women who divorced after pension age, will still need to contact the DWP if they want their pension to be reassessed." It has a calculator for married women to see if they are being underpaid, as well as information for the other groups of people, on its website here. Claimants who think they have been underpaid should contact the government's pension service directly. Its contact details can be found here. DWP making PIP claimants wait nearly a year for crucial assessments, experts warn (Yahoo News UK) State pension: How to check yours, how to buy missing years and everything you need to know (The Independent) Labour to cut winter fuel payments for 150,000 more pensioners (The Telegraph)
The Sun
24-04-2025
- General
- The Sun
Big state pension update for 130,000 owed compensation over underpayments – are you owed money?
HUNDREDS of thousands of pensioners have been given an update on a Government error that left them out of pocket for years. A Department of Work and Pensions (DWP) administrative error meant some pensioners - mostly women - were not paid enough through their state pension, with some being underpaid for years. 1 The DWP has been looking into the issue since 2021 and trying to identify those who have been affected. In a major update, it has now said 130,948 people were affected and that the average underpayment was just over £6,000. As a result the Government has had to pay out £804.7million. The Sun previously reported a widow had been paid out £23,000 after contacting the DWP repeatedly about underpayments. The DWP said last year it had found 119,050 people who were underpaid, meaning a further 11,898 people affected have been identified. Most of those affected are: Married women on low state pensions, whose pension was not automatically uplifted when their husband retired Widows or widowers whose state pension was not automatically reassessed when their spouse died Over-80s with low state pension entitlements who were not automatically uplifted when they turned 80 More than 50,000 of those underpaid were widows or widowers, 47,000 were married women, and 34,000 were over-80s. Some of the errors date back to as early as 1985. The DWP has been looking at hundreds of thousands of pension records to check if pensioners were paid the correct amount. It says it has now reviewed the vast majority of records but it's still waiting for some people to contact them with information, meaning the review isn't likely to be fully completed until March 2027. Martin Lewis issues urgent warning to hundreds of thousands of pensioners missing out on 'superpower' benefit worth £3,900 a year The Office for Budget Responsibility previously estimated the review could could eventually cost the DWP almost £3billion. Rachel Vahey, head of public policy at AJ Bell, said this is "one of the biggest benefit scandals of modern times". "Despite this progress, this appalling situation is not yet resolved. The DWP has confirmed they have completed the vast majority of reviews, but it will take another two years, to the end of March 2027, before all cases are resolved," she said. "It is absolutely critical all those affected by this scandal receive the money they are owed as quickly and efficiently as possible." The DWP has now called on pensioners to provide it with additional information so it can review each record. What are state pension errors? STEVE Webb, partner at LCP and former Pensions Minister, explains what state pension errors are and how they can occur: The way state pensions are worked out is so complicated that many thousands of people have been paid the wrong amount for years without even realising it. The amount of retirement pension you get usually depends on your National Insurance (NI) record. One big source of errors has been cases where NI records have been incorrect, particularly for years spent at home with children. This is a system known as 'Home Responsibilities Protection'. Alternatively, particularly for older pensioners, the amount you get can depend on the NI contributions made by your spouse. Errors have arisen where the Government has failed to adjust the pensions of married women when their husbands retired or failed to increase pensions when someone was bereaved and lost a husband or wife. Although the Government has spent years trying to fix these problems, there are still many thousands of people – many of them older women – on the wrong pension. If you have always thought that your pension seems low, then it is worth contacting the Pensions Service to ask them to check, especially if you spent time at home raising children or if you were widowed and your pension didn't change when your spouse died. Former pensions minister Steve Webb, who is now a partner at financial consultancy Lane Clark & Peacock, said: "We have become so used to stories about state pension errors that it is easy to become dulled to the scale of what went wrong… "The vast majority of those who lost were women, some of whom were underpaid for decades or even went to their grave never paid the right state pension. "The remaining corrections need to be handled as a matter of urgency. This should never be allowed to happen again." And there's more people who have lost out The DWP is also looking into another error affecting hundreds of thousands of mostly women. As many as 370,000 people are thought to have missed out on Home Responsibilities Protection (HRP), a scheme set up to help protect parents' and carers' state pension. The DWP started looking into this second error in January last year. Those affected are mostly mothers who had children before the year 2000. By September last year, HMRC had issued over 370,000 letters to people who might have missed out. Some 19,000 applications were submitted to the DWP to reassess state pensions, and underpayments were found in just over 5,000 cases. On average, each person had been underpaid £7,859, costing the Government £42million. The DWP has not given a new update on how many corrections have been made regarding this error. Former pensions minister Mr Webb estimates that between the two errors, it's likely the total bill will cost the Government more than £1billion. Have you been underpaid? You can check if you've been underpaid and whether you need to make a claim by contacting the Pension Service. But you can also use this online tool developed by LCP to help people understand what state pension they are entitled to inherit on top of their own state pension at The DWP also has a tool to help those receiving the new state pension assess their eligibility for inherited state pension amounts at Plus, there is a guide on inheriting or increasing a state pension at How does the state pension work? AT the moment the current state pension is paid to both men and women from age 66 - but it's due to rise to 67 by 2028 and 68 by 2046. The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age. But not everyone gets the same amount, and you are awarded depending on your National Insurance record. For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings. The new state pension is based on people's National Insurance records. Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension. You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit. If you have gaps, you can top up your record by paying in voluntary National Insurance contributions. To get the old, full basic state pension, you will need 30 years of contributions or credits. You will need at least 10 years on your NI record to get any state pension.
Yahoo
06-04-2025
- Business
- Yahoo
DWP making tweak to both new and old basic state pension this week
The Department for Work and Pensions is tweaking both the New and Basic State Pension this week. Under the triple-lock guarantee, from April the DWP single state pension will increase from £221.20 per week (£11,502 per year) to £230.30 per week (£11,975 per year). The 'old' state pension will increase from £169.50 per week (£8,814 per year) to £176.45 per week (£9,175 per year). Last year, the ONS revealed that the average earnings growth in the three months to July is 4.1%, up from its previous estimate of 4%. The single state pension is set to exceed the personal allowance of £12,570 by 2027/28, even if the benefit increases by only 2.5% a year (the lowest possible element of the triple-lock guarantee). READ MORE: Millions warned to 'brace' for HMRC rule change which kicks in Sunday morning READ MORE: UK households urged to come forward for free £632 water bill discount READ MORE HMRC urges any parent earning under £200,000 to claim free £2,000 perk At some point during this Parliament, the new government will need to address the thorny question of what the state pension should be worth and when Brits should receive. Rachel Vahey, head of public policy at AJ Bell, comments: 'UK pensioners should from next April see a sizeable increase to their state pension of almost £500 a year, to bring it to just under £12,000. 'The chancellor, Rachel Reeves, may choose to shout out about this inflation-beating boost in her first Budget in two weeks' time. Criticism of the decision to scrap the Winter Fuel Payment for all pensioners except those that claim Pension Credit still lingers, and the government will hope this rise in Brits' state pensions will publicly reinforce its commitment to the triple-lock, as well as overshadowing the £200 most pensioners will lose this winter. 'But how long they can keep these promises remains to be seen. The state pension is now at a level perilously close to the frozen personal allowance and should overtake it in two years' time. At that point something must surely give. But slowing the increase in state pension growth or unfreezing the personal allowance both seem unlikely. 'It could be that this fast-approaching crunch time means the government will finally be forced to address the question of how much the state pension should really offer, at what age, and how it can increase payments sustainably each year.'
