Comprehensive Spending Review: pensions
One of the headline announcements in the spending review was that the state retirement age for men and women is to be equalised at 65 by November 2018.
The retirement age for both men and women will then rise to 66 by April 2020, some four years ahead of previous plans.
It is thought the move will affect more than five million people.
For the ten years between 2015 and 2025, the government estimates that the change will save some £30 billion in state spending on pensions and pensioner benefits, while raising an extra £13 billion in income tax and NIC receipts.
Although it is to carry a 26 per cent reduction in its core budget, the Department of Work and Pensions (DWP) is to have the funds to introduce the planned new workplace pension scheme that will mean the automatic enrolment of all employees who are not already members of pension schemes.
The DWP will also set up the National Employment Savings Trust (NEST) which will manage the auto-enrolment scheme’s funds.
Taking on board the recommendations of John Hutton’s interim review of public sector pensions, the government is to raise the level of contributions made by employees.
The exact nature of the additional contributions will have to wait until Lord Hutton’s final report is submitted, but the Chancellor said that progressive changes to public sector employee contributions could see savings of up £1.8 billion by 2014/15.
The increases should be implemented from April 2012.
Elsewhere, the maximum award paid under the Pension Credit is to be frozen for four years as from 2011/12.