Government one step closer to introducing new State Pension

From April 2016 to 5 December 2018, the government will fully index public service pensions for workers reaching State Pension Age.

The new State pension will be introduced in April 2016 and the government will continue to price protect the Guaranteed Minimum Pension of public sector workers.

This means that those who reach State Pension Age on or after the 6^th April 2016 and before the 6^th December 2018 – when the State Pension Age equalises – will receive a full indexed public service pension for the entirety of their life.

This will ensure public service pension payments to these individuals continue to be equal between men and women, removing the inequalities in the current system whereby some groups, such as women and the self-employed, tend to build up low amounts of Additional State Pension.

The introduction of the new State Pension marks the government’s commitment to ensuring that the older generation can live with security in retirement. It will radically simplify state pension provision, making it easier for people to understand what the State Pension will provide in retirement.

In order to manage the transition to the new State Pension, the government will continue its current practice of full price protecting the Guaranteed Minimum Pension of public sector workers, where the Additional State Pension uprating rules do not apply.

A consultation is expected to launch this year on how to address the issue in the longer term, recognising the increased value of the new State Pension, and seeking to balance simplicity, fairness and cost for members, public service pension schemes and the taxpayer.

The government will take into account historical commitments made by previous governments.

 

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