Introduced by Lloyd George in 1908, the Old Age Pensions Act was passed and formed as part of the Social Welfare System. The aim of these acts was to help low-income workers that passed the age of 70 who earned less than 12 shillings a week. It began with these eligible workers receiving an income of 5 shillings a week for single workers or 7 shillings and 6 pence for married couples. Over the coming years, the pensions scheme has changed and transformed in order to keep up with the times as well as to become fairer to the people contributing to this pensions scheme and the people on it.
In 1948 the National Insurance Act was introduced enrolling the general public into a state pension scheme, these could be cashed out when workers reached the age of 65 for men and 60 for women. To relieve the state pension and help workers further between 2012 and 2017, Auto-Enrolment was introduced. This meant that employers must enrol all employees earning over £10,000 onto a company pension scheme.
These schemes aim to help all those in need of it once they finally leave work and get time to relax. However, over the past couple of weeks, the pension scheme has been put into both a good and bad light, and we’re here to explain why and what to do about it.
The Good News
We’ll start with the good news. Anyone that receives a full state pension is on course to have a 4% increase to their pension come April 2020. This is due to the triple lock system that was put into place in 2010. This system was designed to make sure that anyone receiving a pension would be able to survive no matter how the economy was going. This is done by ensuring that the received pension would increase year on year by the best of three factors, yearly earnings growth, the inflation rate or a standard rate, 2.5%.
As of this year, the inflation rate so far has only managed to reach 1.7%, whereas the growth of earnings has managed to reach 4%. If you reached the age to receive the state pension in 2016 you should be receiving the old state pension, this means that your weekly pension will increase from £129.20 to £134.35, meaning you will earn an extra £267.28 a year.
The Not so Good News…
In 1948, when the National Insurance Act was first introduced, the age that men and women could retire was 5 years apart in favour of women. In 1995 this was changed, so that the age of retirement is equal for both men and women. This didn’t come into practice until now but in this time frame, all women were to be notified with 15 years warning so that they can prepare themselves for this change.
These notifications failed to reach many working women leaving them with a shock when it came to when the time they believed they could retire. This has caused uproar for women born in the 1950s as they are now being told that if they’re choosing to retire at 60, then they’ll not receive as high a pension as previously stated. In order to be eligible for the original amount, they’ll have to work a further 6 years.
Many women have given time to demonstrations and campaigns to fight this act in order to reverse it and return their retirement age back to 60. This has fallen on deaf ears though as their claims of gender discrimination fail to be proven in the Court of Law. They claim this provides equality between men and women in an economy where both genders are living longer lives than in the past and are able to hold the same jobs.
Make sure your pension age is up to date
What should be taken from this recent news is that you need to make sure that your pension age is up to date. If you’ve provided the incorrect date to receive your pension, then you’re at risk of losing £1,000’s of pounds. It’s easy to check and update your pension, you can do it online through the government website or you can call the Department of Work and Pensions customer services to make sure that all your documents are correct.