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All change for pensioners

All change for pensioners

Category: Pensions

Updated: 24/06/2010
First Published: 24/06/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
While the coalition Government's first Budget is likely to have an impact on all our lives, and probably not in a positive way, it was noticeable that one group of people in particular seemed to have been singled out for special attention.

A whole raft of measures aimed at improving the lives of pensioners today and those of the future were unveiled.

With people living longer and yet not necessarily saving all that they should towards a pension, it is feared that the retirees of the future might struggle to make ends meet.

However, hoping to deliver on its promise to 'reinvigorate retirement', the Government believes that some of the following changes it is proposing could make a difference:

1. From April next year, the link between the basic state pension and earnings is to be restored. Under a so-called 'triple guarantee', this means the state pension will now go up by the greater of either the increase in average earnings, the rise in prices (according to the Consumer Prices Index) or by 2.5%.

2. A rise in the state pension age for men from 65 to 66 is to be fast tracked and could come into force as early as 2016. The coalition would probably raise the pension age for women to the same level a few years later, while an increase to age 70 for both sexes has been mooted as a possibility over the course of the coming decades.

3. The Government wants to scrap the default retirement age which gives employers the right to remove workers from their jobs at the age of 65. Although no date has been set for this to happen, the coalition will want to remove the rule that it says effectively 'casts older workers onto the scrap heap' sooner rather than later.

4. The previous Government was due to introduce in 2012 a scheme which would see workers automatically enrolled into a pension scheme. The coalition seems set to continue with the scheme, known as NEST, which it is hoped will encourage more people to save for their retirement, but is conducting a review to make sure it will work and how best to introduce it.

5. Some people object to saving into a pension as they are effectively pushed into using their pension pots to buy an annuity at the age of 75. The Government has announced that the existing rules will be abolished by April 2011, but will push the age back until age 77 while it works out exactly what to do.

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