Does the state pension provide protection for all?
While I welcome the government's recently announced state pension reform as a major step towards giving people certainty about the first pillar of their retirement income, my concern is whether there is sufficient protection for women, carers and immigrant workers.
Under the reforms, you need to have paid at least 10 years' worth of National Insurance Contributions in order to qualify for a reduced state pension and 35 years for a full one.
10 years is a long time for women who have had to take career breaks to bring up their families and for carers, who are usually women, and who may find it difficult to meet the 10 year threshold if they have to spend many years caring for elderly relatives.
I don't see any protection for these carers, when they should be recognised as doing a valuable job which often saves the State money.
The same applies to migrant workers who come to work in the UK for a few years. When, as a country, we have encouraged immigrants to come here, it seems unfair that anyone who works for less than 10 years, ends up with nothing to show for it in terms of basic state pension benefits.
My other concern is that the constant changing of the rules regarding eligibility for the full basic state pension is confusing for people and keeps throwing up different winners and losers.
You used to have to work for 40 years to qualify, it was then reduced to 30 years, while the latest reforms have increased the number of qualifying working years to 35. It is very difficult for people to plan for their retirement, when there is change upon change, upon change.
Anna Sofat is managing director at Addidi Wealth
This article was written for our sister website Money Observer
A scheme originally established in 1944 to provide protection against sickness and unemployment as well as helping fund the National Health Service (NHS) and state benefits. NI contributions are compulsory and based on a person’s earnings above a certain threshold. There are several classes of NI, but which one an individual pays depends on whether they are employed, self-employed, unemployed or an employer. Payment of Class 1 contributions by employees gives them entitlement to the basic state pension, the additional state pension, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement benefits. From April 2016, to qualify for the full state pension, individuals will need 35 years’ of NI contributions.