Page last updated at 12:30 GMT, Friday, 24 October 2008 13:30 UK

State pension benefits improved

Old women
The change should help women who have looked after children or other relatives

Women aged 53 to 60 will soon be able to pay a further six years worth of national insurance (NI) contributions to boost their state pensions.

It raises to 12 the number of extra years of contributions that can be topped up, going back to 1975.

The government's decision is included in an amendment to the Pensions Bill currently going through Parliament.

The change is aimed at helping some women who left the workforce to raise families or care for other relatives.

The extra six years of contributions will generate extra pension of about £18 a week from 2010.

The secretary of state for Work & Pensions, James Purnell, said: "We are mindful of the potential disadvantages faced by those who do not have a full work history, mostly women and those with caring responsibilities."

"This is fair, affordable and straightforward - and it will give more people the chance of a more secure future to look forward to in retirement,” he added.

Delighted

The change applies to those people, men and women, who reach state pension age between 6 April 2008 and 5 April 2015.

The latest reform was welcomed by some charities and pension campaigners.

Gordon Lishman, Director General of Age Concern, said: “We are absolutely delighted by this decision which will give thousands of older women the opportunity to build up a better state pension. "

However the National Pensioners Convention (NPC) described it as window dressing.

"Up to five million existing women pensioners fail to get a full state pension because they spent years raising children, caring for relatives or working part-time," said Dot Gibson of the NPC.

Last December the government dropped an initial plan to let people top up their NI records by a further three years, from six to nine.

Its change of heart comes on top of substantial reforms to the state pension system that have already been passed into law by the 2007 Pensions Act.

In 2010 the number of years of NI contributions needed to qualify for a full basic state pension will come down to 30 for both men and women.

Currently the number of years needed are 39 for women and 44 for men.

New weekly credits will also come in to help people caring for children or disabled people build up their contribution records in the same way as if they had been working.

Pension credit

The latest change will not benefit everyone.

People who want to take advantage of the ability to buy six extra year's worth of contributions will have to have paid for a minimum of 20 years already.

The cost of buying those extra contributions will also go up, from the current rate of £8.10 per week.

The BBC's personal finance correspondent, Richard Scott, said that the latest improvement might benefit only a few people and was not straightforward to judge.

"The government has a means tested benefit called the pension credit, which guarantees to top up pension income to £124.05 regardless of NI contributions," he said.

"So anyone who is single, and who does not have enough contributions or enough other income would not want to top up in any case as they will get more for doing nothing.

"It helps people who won't qualify for pension credit, who can afford to pay approximately £2500 for the extra credits and who qualify with 20 years contributions already," he added.


RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites


FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC navigation

BBC © 2013 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific