'New deal' for women on pensions

Most of Lord Turner's plans will be in the White Paper

Plans to improve pensions for women are set to feature in the government's upcoming pensions White Paper.

Work and Pensions Secretary John Hutton said that a "new deal for women" would entail women be given enhanced national insurance credits.

This could mean working for fewer years to gain the full state pension.

But Mr Hutton ruled out a new state pension entitlement based on residency alone, as it would not improve the position of older women fast enough.

Mr Hutton said that the government's pension proposals meant that an extra 270,000 women would be entitled to a full state pension from 2020.

Residency test

Mr Hutton's speech to the Fabian Society comes ahead of reports that the government will announce its response to the report of the Pension Commission headed by Lord Turner next week.

The White Paper will reject the idea - put forward by Lord Turner - that the state pension should be based on residency, rather than contributions.

The government believes that this suggestion would be too slow in improving matters for women currently aged 45 or over.

"We simply cannot afford to miss this key group...That's why at the heart of next week's reforms will be a new contributory principle that gives women a fairer entitlement to the basic state pension more quickly," Mr Hutton said in his speech.

The government estimates that under Lord Turner's suggestion, the number of women retiring on the full basic state pension would not rise if a residency entitlement to the state pension was introduced in 2010.

Also, on current projections, only 90,000 additional women would retire on a full pension over the following ten years.

Fewer contributions

The government is proposing to overhaul the current system of Home Responsibility Protection.

Under this, women can build up National Insurance contributions, and thus future state pension, while looking after children or elderly relatives and not working.

Another possibility is that some women may earn an entitlement to the full state pension after just 30 years of work, instead of 39 years.

Despite this, Mr Hutton will say that next week's White Paper will "remain basically true to Lord Turner's blueprint".

The government has already made it clear that higher state pensions, with a restored link to national average earnings, will be introduced - albeit with a later eventual pension age of 68.

And a new National Pensions Saving Scheme will be introduced involving compulsory employer contributions to top up the state pension.