It is no secret that I have spent most of my working life in pensions – thinking about them, writing about them, occasionally dreaming about them, and debating how, together, we can make pensions work better for people.
I have always campaigned for plain-speaking across the industry and I want to help explain issues better for you by writing blogs with updates from all things in the pension space.
We have seen enormous change to pensions over the last decade. Changes which could help millions of people save more for their retirement and achieve better value.
There are three big pension revolutions happening – the new State Pension, Automatic Enrolment and the pension freedoms.
The new State Pension – a firm foundation from the State
The introduction of the new State Pension on 6 April 2016 will begin to bring clarity to a system that few people truly understand, and reduce the need for pensioner means-testing – making saving worthwhile for millions of people.
I know we have more to do to explain exactly what this means for individuals. Yes, we are simplifying the State Pension but we have a really complex legacy to deal with from the past and that causes all kinds of problems as we transition from the old to the new systems.
We must correct the misunderstanding that in the early years everybody will receive the same amount of State Pension. That will be the case in the future. However, because our UK State Pension has always been based on what people paid in through their National Insurance contributions, the past complexity means people will start off with different amounts in the new system.
We will recognise the National insurance record people have built up in the past and bring it into the new State Pension.
After April 2016, everyone will have a ‘starting amount’ in the new system. From then onwards, regardless of your earnings or the type of National Insurance credits or contributions you make, you will add the same amount of future state pension to your record, until you reach the full amount or you reach State Pension age. So the new system will provide a clear foundation for the future and people can build their personal savings on top of their State Pension to meet their retirement income needs.
But we must not forget that this revolution in state provision is taking place at the same time as a revolution in private pensions.
Automatic enrolment – more people saving in a private pension
Over five million workers have already been given the opportunity to save into a pension thanks to automatic enrolment, many for the first time.
In time, up to 10 million workers will be newly enrolled into a workplace pension plan by their employer.
But there are big challenges ahead as the 1.8m small and micro employers need to set up a pension scheme for their qualifying staff by 2018.
Recognising this, we have been adapting the support available for firms or individuals. We are working both with employers and the pensions industry to understand how best to help and support them through the auto-enrolment process.
Pension freedoms – trusting people with their own money
I have long been an advocate of trusting people with their own money, and the new pension freedoms have made an historic difference.
If you save into a private pension, you can keep your money invested, without buying an annuity, you can transfer your benefits to a different scheme which may be more suitable for you or, where the rules of the scheme permit, you can withdraw some of your money and spend it as you see fit under the new rules.
The new pensions landscape can offer better consumer choice for all pension savers, not just the wealthiest and we have also set up the Pension Wise free impartial guidance service to help you make better informed decisions.
Of course, we need to work hard to tackle scams – ensuring that people do not lose their hard-earned savings to smooth-talking tricksters – and that has long been a challenge facing pension savers. We have set up dedicated teams to try to prevent such crime and we are asking you to recognise the need to ignore anyone who cold-calls or writes out of the blue about your pension.
And, in turn, we need to monitor the pensions industry to make sure the freedoms work for as many people as possible – with the right products, fair value and the right incentives, to help you get what you need.
Why blog?
Sadly, most people find pensions baffling – especially the language and jargon – and this can act as a barrier to people saving anything at all.
A recent Ipsos MORI survey found that six in 10 people surveyed say they sometimes feel pensions are so complicated they cannot really understand the best thing to do. Around 38% of people say they “try to avoid thinking about” what will happen when they stop working.
I want to help make it all clearer if I can. I know it’s complicated, I know there’s a lot of change but I want to help to make it easier to save for a happy and secure retirement.
I hope these blogs will help – they are just one part of what we’re trying to do to help explain pensions better. Please do send your comments and feedback and my team and I will do our best to address them.
Baroness Ros Altmann, Minister for Pensions
16 comments
Comment by Debbie de Spon posted on
Please could you explain how it's fair to move the goalposts for 1950's women increasing their pension age without appropriate individual notice to hundreds of thousands of women who have worked all their lives and made their contributions? Yes, that is baffling.
Comment by DWP Pensions Latest posted on
From 1940, women’s State Pension age was five years younger than men’s, even though women tend to live longer. In 1995, legislation was introduced to remove this inequality and equalise State Pension age.Life expectancy increases and social changes required the inequality between men and women’s State Pension ages to be removed to achieve fiscal sustainability and inter-generational fairness. Since April 2010, women’s State Pension age has been gradually increasing to bring it in line with men’s (which is currently 65). This was accelerated by legislation introduced in 2011, so that equalisation is achieved by November 2018, instead of April 2020.
With the further sharp increase in the number of people expected to be living longer in retirement, the view was that the previous timetable to increase State Pension age did not go far enough in ensuring that the pensions system remains affordable and sustainable. Therefore, the date by which State Pension age reaches 66 for both men and women was brought forward to October 2020. However, the changes were timetabled so that the maximum delay that anyone would experience in claiming their State Pension was limited to 18 months, in comparison with the 1995 timetable.
The Government responded to the campaign calling for a slower timetable for Pension age increases and amended its original plans to delay equalisation by 6 months, at a cost to taxpayers of over £1 bn.
These proposals were published in November 2010 and the Pensions Bill 2011 was introduced into the House of Lords in January 2011. There was extensive coverage of the proposals in the media and the matter was debated at length in both Houses.
The DWP has written to those affected by State Pension age changes and who are due to reach State Pension age by 2026, using the address details recorded at the time. State Pension estimates (issued to individuals on request) also took the 1995 State Pension age changes into account. Therefore, State Pension estimates have been providing individuals with their most up-to-date State Pension age since 1995. The DWP also makes information on State Pension age changes, and who they affect, available on http://www.gov.uk, including the option to calculate State Pension age.
The Government is setting up an independent review of future State Pension age that will report by May 2017, taking into account trends in life expectancy and health along with wider factors, like job opportunities for older workers and the impact of any proposals on different groups (for example women and those in manual jobs). This is an important opportunity to ensure that State Pension age changes are fully considered by the Government, and based on independent analysis of the relevant evidence.
Any future changes to State Pension age will, as now, require primary legislation and be subject to the full scrutiny of Parliament.
Comment by Linda Edwards-Shea posted on
My state pension date currently stands at March 2018. This is my third state pension date. Will it change again? I'm one of the group of 700,000 women who have lost tens of thousands of pounds from their old age by the DWP's inept handling of pension-age equalisation. My loss is about £30,000. I'm not eligible for the full single-tier pension because I paid into the Teachers Pension Scheme for 15 years. What will the 'starting amount' be for me, and how much higher will it be to compensate for the financial loss imposed on me by the DWP's inability to keep me informed? I'm still waiting for a letter from the DWP to tell me my pension age has changed. My original state pension date was September 2013.
Comment by DWP Pensions Latest posted on
From 1940, women’s State Pension age was five years younger than men’s, even though women tend to live longer. In 1995, legislation was introduced to remove this inequality and equalise State Pension age.Life expectancy increases and social changes required the inequality between men and women’s State Pension ages to be removed to achieve fiscal sustainability and inter-generational fairness. Since April 2010, women’s State Pension age has been gradually increasing to bring it in line with men’s (which is currently 65). This was accelerated by legislation introduced in 2011, so that equalisation is achieved by November 2018, instead of April 2020.
With the further sharp increase in the number of people expected to be living longer in retirement, the view was that the previous timetable to increase State Pension age did not go far enough in ensuring that the pensions system remains affordable and sustainable. Therefore, the date by which State Pension age reaches 66 for both men and women was brought forward to October 2020. However, the changes were timetabled so that the maximum delay that anyone would experience in claiming their State Pension was limited to 18 months, in comparison with the 1995 timetable.
The Government responded to the campaign calling for a slower timetable for Pension age increases and amended its original plans to delay equalisation by 6 months, at a cost to taxpayers of over £1 bn.
These proposals were published in November 2010 and the Pensions Bill 2011 was introduced into the House of Lords in January 2011. There was extensive coverage of the proposals in the media and the matter was debated at length in both Houses.
The DWP has written to those affected by State Pension age changes and who are due to reach State Pension age by 2026, using the address details recorded at the time. State Pension estimates (issued to individuals on request) also took the 1995 State Pension age changes into account. Therefore, State Pension estimates have been providing individuals with their most up-to-date State Pension age since 1995. The DWP also makes information on State Pension age changes, and who they affect, available on http://www.gov.uk, including the option to calculate State Pension age.
The Government is setting up an independent review of future State Pension age that will report by May 2017, taking into account trends in life expectancy and health along with wider factors, like job opportunities for older workers and the impact of any proposals on different groups (for example women and those in manual jobs). This is an important opportunity to ensure that State Pension age changes are fully considered by the Government, and based on independent analysis of the relevant evidence.
Any future changes to State Pension age will, as now, require primary legislation and be subject to the full scrutiny of Parliament.
Comment by Paul Lewis posted on
I applaud your openness and work here.
My query and comment. I am 58, have taken the pensions cap protection on my SiPP at just over £1m (to last my wife and I for say 30 years, so £347 per week for us each to live on). I lose all protection on the pension if I or employer contribute a penny extra into any pension.
I was made redundant but after a year of job searching, I now have offer of very good job but the HR dept having real problems with not paying me any pension and will just cut the generous pension payment out if I join. They have no mechanism to pay anything else such as shares, ISA etc. What do I do ?
Under the present rules I stand to lose over £5,000 per annum of pension payment because I took the protection. They cannot pay me extra in PaYE (which would equate to over £9300 extra salary).
I know you cannot fix all things but the ceiling cap for SIPP pension is counter productive for private pensions in that it undermines l/t self suffiancy and getting the over 55's back to work.
Seems like this is discriminatory against anyone who ever takes the pension cap protection and older workers who are almost always going to be the only ones to take this counter productive protection ?
Comment by vera dennis posted on
Dear Baroness Ross Altman
Thank you for your blog regarding pensions, I am afraid it is to late for me I was born in 1956 and was not told about my pension age was to be raised from 60 to 66 until I had a letter in 2012 stating that fact.I believe we need at least 10 years written notice, and I didn't get that in 1995 or 2011, this affects me greatly it is too late for me to plan ahead, I hope you will look into the rapid changes of pensions for ladies born in the 50s.Equalization is not a problem only the acceleration of my pension , I hope you will be looking into this urgently.
Comment by DWP Pensions Latest posted on
From 1940, women’s State Pension age was five years younger than men’s, even though women tend to live longer. In 1995, legislation was introduced to remove this inequality and equalise State Pension age.Life expectancy increases and social changes required the inequality between men and women’s State Pension ages to be removed to achieve fiscal sustainability and inter-generational fairness. Since April 2010, women’s State Pension age has been gradually increasing to bring it in line with men’s (which is currently 65). This was accelerated by legislation introduced in 2011, so that equalisation is achieved by November 2018, instead of April 2020.
With the further sharp increase in the number of people expected to be living longer in retirement, the view was that the previous timetable to increase State Pension age did not go far enough in ensuring that the pensions system remains affordable and sustainable. Therefore, the date by which State Pension age reaches 66 for both men and women was brought forward to October 2020. However, the changes were timetabled so that the maximum delay that anyone would experience in claiming their State Pension was limited to 18 months, in comparison with the 1995 timetable.
The Government responded to the campaign calling for a slower timetable for Pension age increases and amended its original plans to delay equalisation by 6 months, at a cost to taxpayers of over £1 bn.
These proposals were published in November 2010 and the Pensions Bill 2011 was introduced into the House of Lords in January 2011. There was extensive coverage of the proposals in the media and the matter was debated at length in both Houses.
The DWP has written to those affected by State Pension age changes and who are due to reach State Pension age by 2026, using the address details recorded at the time. State Pension estimates (issued to individuals on request) also took the 1995 State Pension age changes into account. Therefore, State Pension estimates have been providing individuals with their most up-to-date State Pension age since 1995. The DWP also makes information on State Pension age changes, and who they affect, available on http://www.gov.uk, including the option to calculate State Pension age.
The Government is setting up an independent review of future State Pension age that will report by May 2017, taking into account trends in life expectancy and health along with wider factors, like job opportunities for older workers and the impact of any proposals on different groups (for example women and those in manual jobs). This is an important opportunity to ensure that State Pension age changes are fully considered by the Government, and based on independent analysis of the relevant evidence.
Any future changes to State Pension age will, as now, require primary legislation and be subject to the full scrutiny of Parliament.
Comment by John posted on
Can you tell me Is there honesty and justice for a woman who has worked all her life,to be told her pension will now not be available to her for an another six years of her life, why? she was only a matter of weeks to her sixtieth birthday, she has been told she will have to wait till she has reached the age of 65 years and 2 month.If there is a moral honest answer please give it.
Comment by DWP Pensions Latest posted on
From 1940, women’s State Pension age was five years younger than men’s, even though women tend to live longer. In 1995, legislation was introduced to remove this inequality and equalise State Pension age.Life expectancy increases and social changes required the inequality between men and women’s State Pension ages to be removed to achieve fiscal sustainability and inter-generational fairness. Since April 2010, women’s State Pension age has been gradually increasing to bring it in line with men’s (which is currently 65). This was accelerated by legislation introduced in 2011, so that equalisation is achieved by November 2018, instead of April 2020.
With the further sharp increase in the number of people expected to be living longer in retirement, the view was that the previous timetable to increase State Pension age did not go far enough in ensuring that the pensions system remains affordable and sustainable. Therefore, the date by which State Pension age reaches 66 for both men and women was brought forward to October 2020. However, the changes were timetabled so that the maximum delay that anyone would experience in claiming their State Pension was limited to 18 months, in comparison with the 1995 timetable.
The Government responded to the campaign calling for a slower timetable for Pension age increases and amended its original plans to delay equalisation by 6 months, at a cost to taxpayers of over £1 bn.
These proposals were published in November 2010 and the Pensions Bill 2011 was introduced into the House of Lords in January 2011. There was extensive coverage of the proposals in the media and the matter was debated at length in both Houses.
The DWP has written to those affected by State Pension age changes and who are due to reach State Pension age by 2026, using the address details recorded at the time. State Pension estimates (issued to individuals on request) also took the 1995 State Pension age changes into account. Therefore, State Pension estimates have been providing individuals with their most up-to-date State Pension age since 1995. The DWP also makes information on State Pension age changes, and who they affect, available on http://www.gov.uk, including the option to calculate State Pension age.
The Government is setting up an independent review of future State Pension age that will report by May 2017, taking into account trends in life expectancy and health along with wider factors, like job opportunities for older workers and the impact of any proposals on different groups (for example women and those in manual jobs). This is an important opportunity to ensure that State Pension age changes are fully considered by the Government, and based on independent analysis of the relevant evidence.
Any future changes to State Pension age will, as now, require primary legislation and be subject to the full scrutiny of Parliament.
Comment by R Thomas posted on
Would like an update on unlocking poor value annuities people were forced to take out …gone too quiet
Comment by Michele Carlile posted on
Ros Altman we spoke last Summer about the unfair hikes of woman pension age which I am caught in. Like many women of my age I am now sick with an inherited condition - no extended longevity in my generation - maybe the next! What are you doing about this issue and where were you during the enquiry last week!
What you and your government have not considered in your imagined world of longevity and continued employment of women till their state increased pension age is how the real world works in the here and now!
If a woman has already retired because you her employer has expected women to end their working life at 60 - how do you demand your job back because of the sudden changes the coalition made! Are organisations to take women retirees even if their contract ended at 60 in line with the old retirement age? The idea if phasing-in equality with men is fine and in Poland where a similar change is taking place right now it is planned from now to 2040! did your government really imagine this high speed change woukd really work or was the consequence nit researched adequately? the coalition interfered with an already high paced change moving women's pensions to the early 60's which was already too fast a pace for this society today. But the hardships and poverty created by the extra hike in 2011 for my year group is entirely unfair and unreasonable.
Currently in the real world now women are more often not fit enough to work full time because of inherited disease and where employment needs to catch up with pension laws. Employers don't want suck staff. These ideas of continued employment for woman are useful in a future world Of better health from medical advances. A future working world where women have equal private pension opportunities with men throughout their working lives including childcare; none of which was offered to women born in the 50s. But not shoving such massive change onto a working world yet unable and unwilling to employ women in their late 50's let alone mid 60s.
Since you are a woman in the right place now at the right time it is your moral obligation to continue your earlier support for restoration of justice for women thrown into poverty by the governments poorly planned sudden hike of womans pension age and use your position to provide immediate financial relief to the women affected.
Comment by Chris posted on
I am a 62 year old lady who during my life has been a hardworking married mother paying full contributions in order to have 38 years of National Insurance contributions which almost throughout my working life I have been informed that I needed the total to qualify in order to claim my state pension at sixty years of age , I did not foresee the change in pension age and having found out just by chance being that I was going through divorce in 2008 , ending a thirty seven year marriage (on the onset of the mediation my financial forecasts were that I would be aged sixty in receipt of state pension and forty two percent of my husbands monthly army pension . My x husband continued to be allowed his share of his monthly but without my percentage (note I have not been in receipt of ) and it is not being accumulated on my behalf , but the MOD have stated that I can claim it at fifty five but if I do it will be actuarially reduced being that I am claiming it early before I am state pension age of 65! The goal posts have changed for me but this is inequality being that my x husband has continued to have his share in monthly MOD pension ! I have calculated with the age change effecting both pensions for me with not giving me enough time to financially adjust ( recommended) ten years I have one hundred thousand pounds lesser in finances! I am from a working class family I have no inheritance, and I am still working ! May I point out I was a unpaid carer for both of my parents and continued to work, and a working parent .
Comment by DWP Pensions Latest posted on
From 1940, women’s State Pension age was five years younger than men’s, even though women tend to live longer. In 1995, legislation was introduced to remove this inequality and equalise State Pension age.Life expectancy increases and social changes required the inequality between men and women’s State Pension ages to be removed to achieve fiscal sustainability and inter-generational fairness. Since April 2010, women’s State Pension age has been gradually increasing to bring it in line with men’s (which is currently 65). This was accelerated by legislation introduced in 2011, so that equalisation is achieved by November 2018, instead of April 2020.
With the further sharp increase in the number of people expected to be living longer in retirement, the view was that the previous timetable to increase State Pension age did not go far enough in ensuring that the pensions system remains affordable and sustainable. Therefore, the date by which State Pension age reaches 66 for both men and women was brought forward to October 2020. However, the changes were timetabled so that the maximum delay that anyone would experience in claiming their State Pension was limited to 18 months, in comparison with the 1995 timetable.
The Government responded to the campaign calling for a slower timetable for Pension age increases and amended its original plans to delay equalisation by 6 months, at a cost to taxpayers of over £1 bn.
These proposals were published in November 2010 and the Pensions Bill 2011 was introduced into the House of Lords in January 2011. There was extensive coverage of the proposals in the media and the matter was debated at length in both Houses.
The DWP has written to those affected by State Pension age changes and who are due to reach State Pension age by 2026, using the address details recorded at the time. State Pension estimates (issued to individuals on request) also took the 1995 State Pension age changes into account. Therefore, State Pension estimates have been providing individuals with their most up-to-date State Pension age since 1995. The DWP also makes information on State Pension age changes, and who they affect, available on http://www.gov.uk, including the option to calculate State Pension age.
The Government is setting up an independent review of future State Pension age that will report by May 2017, taking into account trends in life expectancy and health along with wider factors, like job opportunities for older workers and the impact of any proposals on different groups (for example women and those in manual jobs). This is an important opportunity to ensure that State Pension age changes are fully considered by the Government, and based on independent analysis of the relevant evidence.
Any future changes to State Pension age will, as now, require primary legislation and be subject to the full scrutiny of Parliament.
Comment by K Pilpel posted on
Your repeated standard bureaucratic response, telling women the history of the pension changes imposed on them, does nothing to alleviate their current financial difficulties. You are speaking to honest working citizens who have been given misleading or inadequate information about changes to their pension rights, with insufficient notice to make alternative arrangements. Please respond to them with the courtesy, respect and understanding they deserve and direct them to a place where they can find the help they need. Or does the state no longer provide support for citizens given misleading or inadequate financial information? So disappointed that this response is considered appropriate.
Comment by DWP Pensions Latest posted on
Our aim is to be helpful and courteous when responding and to try to improve understanding of the pension reforms and what they may mean for people’s own situations. Part of the purpose of writing these blogs is to provide more information and we welcome feedback. We recognise that pension issues are complex and the language can sound bureaucratic, but our aim is to help people understand the pension system better if we can. To find out more about your own State Pension, please visit our new digital service or request a State Pension statement. You can find out more at http://www.gov.uk/check-state-pension.
Comment by Julie Waltham posted on
Having sent 3 emails and received no response I assume you can find no words that justify the pension system for women born in the 1950's. I recently found out that a friend born 6 months before me will receive her pension 3 months after she is 63, but the forecast I have been given is for me to receive mine 21 months after I am 63. Can you please explain the equality in this. It is totally insane and discriminatory and therefore illegal. Like other women I took early retirement based on information I was aware of but then all the goal posts were changed leaving me high and dry and living on a small personal pension. Government have the cheek to tell us to sign on to Job Seekers but you cannot do this if you have any form of income and by not signing on you get no other benefits such as eye and oral care. Like others I am losing thousands of pounds of income meant to pay bills, you keep saying you are looking at this but we see no results and can only assume you will leave it so long that we will all have passed away and you can continue to use all the money we have paid over the years to pay benefits to the cheats and fraudsters who have only ever been on benefits and continue to receive them even after being released from jail, the system is a complete mess and like the previous comment I see no purpose in you keep repeating the standard bureaucratic reply as it just makes the situation worse and gives you no credence. Unfortunately the government does not know the meaning of the word 'EQUALITY' if it did we would not now be living through this.