Page last updated at 14:26 GMT, Friday, 24 October 2008 15:26 UK

Women in line for pensions boost

Protesting pensioner
The new Pensions Bill will go before the House of Lords next week

Thousands more women will be able to boost their state pension under a scheme announced by the government.

Currently 90% of men but 35% of women qualify for the full 90.70 a week - many gave up work to care for children so did not make sufficient NI payments.

They had been able to "buy back" up to six years but will be allowed to buy another six with a one-off payment.

The Lib Dems said the change would not help the worst off or women who had already retired.

The changes - made in an amendment to the Pensions Bill - would affect men and women who reach state pension age between 5 April 2008 and 5 April 2015 and already have 20 years on their National Insurance record.

'Fair and affordable'

It is estimated that 90% of those who will benefit will be women, although it will not affect women who are already over 60.

Up to 555,000 people will be eligible to buy the extra years the Department for Work and Pensions estimates.

But it expects only about 20% of these to take it up as it benefits those who do not qualify for pension credit, have 20 years' contributions and can afford to buy back years at 400 each.

FROM THE TODAY PROGRAMME

It is estimated that buying back an extra six years would mean an extra 18 a week from 2010.

The move follows a long cross-party campaign, led by former Labour minister Baroness Hollis, but ministers had resisted efforts arguing it was not affordable.

In 2007 the government was defeated in the House of Lords who voted through a similar amendment on the Pensions Bill.

'Secure future'

It had indicated it would support the plan but later dropped the idea, saying it would not help the poorest pensioners.

BBC political correspondent Gary O'Donoghue said the government had been facing another defeat on the issue in the Lords next week.

Announcing the changes, Work and Pensions Secretary James Purnell said: "This is a fair, affordable and straightforward and it will give more people the chance of a secure future to look forward to in retirement."

These changes will not benefit those women who are the worst off and facing the bleakest retirement
Jenny Willott
Lib Dems

Mr Purnell says the Pensions Bill means that by 2010 about 75% of women reaching state pension age would be entitled to a full basic state pension, and by 2025 that would rise to 90%.

For the Conservatives, Nigel Waterson said it was "unacceptable" that less than a third of women receive the state pension.

He said: "We have supported other measures to help women in retirement and we support this latest U-turn by the government, although I wonder why they have dithered for so long before taking action."

But the Lib Dems' pensions spokesman Jenny Willott said while they were "good first steps," women would be disappointed when they read the small print.

She said: "These changes will not benefit those women who are the worst off and facing the bleakest retirement.

"It doesn't apply to women who have already retired and who are not receiving a full state pension. And it doesn't apply to those who have made under a quarter of full contributions, who currently get no basic state pension at all."

Dr Ros Altmann, head of the Pensions Action Group, told BBC Radio 4's Today programme: "The idea is that the cost of buying a year's worth of extra pension is much less than the value of the extra pension you will get during a normal period of retirement."

But she warned that women should take advice before committing money, as a sizeable proportion of those on low and middle incomes will anyway be entitled to 130 a week in state pension under the pension credit.

The government had already announced it was to reduce the level of NI contributions needed for a full state pension.

From 2010 men and women will need to have paid contributions for just 30 years. Currently men need 44 years of contributions while women need 39 years.

There will also a new system of NI credits which will recognise caring for children or a disabled person in the same way as paid work.




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