The winners and losers in the UK pension reforms

The UK pensions system is set to undergo a massive reform, which will see the self-employed better off but many existing pensioners losing out.

Iain Duncan Smith, the secretary of state for work and pensions, confirmed plans to introduce a weekly flat-rate state pension of £155.

But the changes will not apply to current pensioners and Chancellor George Osborne admits it would take "years to come into effect".

At present anyone over the age of 65 is entitled to a basic pension of £102.15 a week.

Added to this is either the state second pension (S2P) based on national insurance contributions or the means-tested element for lower earners, known as pension credit, which boosts pensions up to £132.60 a week for a single person and £202.40 for a couple.


Mothers who have taken time off to raise children, low earners and the self-employed will benefit most from the changes.

Under the current system, national insurance contributions fund the S2P, which is paid on top of the basic pension. At the moment, many women who take time off work to bring up children don't build up enough NI contributions to qualify for the full S2P. The unemployed are also automatically exempt.

The new system will eradicate the S2P, with everyone receiving the same rate, regardless of contributions. 


The big losers will be existing pensioners and anyone about to retire within the next few years, as they won't qualify for the flat rate.

Pensions expert Ros Altmann, director general of Saga, says: "None of today's pensioners will get less than they do now, but they won't receive the new benefits. This is a big drawback."

Your views on the matter

Moneywise readers aired their views on the government's reform to pensions on

Jennifer Turnbull says:

"This is good news for pensioners, but the fact that it will only be for new pensioners is really unfair to the many who are receiving their pension already or are due to receive it in the next few years. It will mean some pensioners receiving quite a bit more than others."

John Deakin says:

"It's disgusting, disgraceful, despicable, deplorable, reprehensible, immoral and should be illegal that the government is even considering not giving the new state pension to current pensioners.

"How can they justify not giving the increase to old people who have worked all of their lives, paid their taxes and insurance contributions and in many cases fought for their country?"

Val Jean says:

"I was relieved to hear that the new flat rate would not be applied to all existing pensioners at the time of introduction. Of course, I understand the frustration of those who miss out and remain on a lower pension, and I would support lifting them to the new rate.

"But some of us are presently on substantially higher-rate state pensions and had feared seeing all this swept away with a blanket change."

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Your Comments

I just cannot believe that those of us who are currently receiving a state pension are to be ignored by this ignorant and arrogant government most of whom would have no idea how to "Exist" on the basic state pension. let alone try to pay increased utilities bills, over priced food and extortionate tax on our petrol, supposing we can actually afford a small car! We put the money there in the first place. Disgusting.

I expect they reckon that the existing pensioners will be at death,s door by the time the new pensioners will get theirs, HA ha.. !!! How many years have we to go ???

As a single person I had to work 40 years to qualify for my pension not the 30 years that is now proposed. I also had to pay full NI contributions with no break for having children. I therefore think it is grossly unfair that the older you are the more you get penalised!!! Why does this government think this new flat rate pension for new pensions is in any way fair?

It is the biggest misappropriation of Pension Contributions since Robert Maxwell.

Why should those who have contributed nothing get the same pension as those who have contributed extra NI payments

Pure and simple theft by the Tories.

I can understand the coalition government bringing it in but not the ignorant way of excluding one group of the same people as another.
obviously it is a plan to do it on the cheap (nothing unusual there)
At present we are at the bottom of all european countries for pension payment so what better way by starting on just the first year of a group in about 2015 then boasting to the world that we in the uk pay a wonderful pension ( to about 1% of pensioners).
I think it shows the contemptable attitude of this bunch of millionaires.
How can you have such as my wife on £60 per week and her younger sister on £150 +just to pretend it is all ok now when it creates the exact opposite.
Sadly I don't see Labour standing up for fair play so I can only assume they are all in it together and out to get us back for kicking up a fuss and complaining about the MP's involved in the expenses scandal

From what I have read, both myself and my wife will be worse off because of the unfairness of the new pension proposals. My wife has already had her pension age increased to 62+ from 60 but will retire before the new increased amount is introduced, costing her about £28 per week. I will be penalised because I don't retire until after the new system is introduced but as my pension forecast suggests that under the present system I would be entitled to approximately £178 per week I will also be £28 per week worse off. Therefore we are looking at being approximately £56 worse off than pensioners qualifying for the new system. How on earth is this meant to be an improvement? A totally unfair and divisive proposal.

 It's an abomination...... an absolute disgrace.......if it ever comes to fruition I for one intend to organise protests..... traffic chaos.... whatever it takes to get it overturned..


John Deakin - Rhyl

It is disgusting if current pensioners don't get the same rate as new pensioners - that is immoral!

This government is about to hurt some pensioner couples who are receiving Pension Credit, if an amendment in the Welfare Reform Bill goes through parliament in it's present form, see below.

Welfare Reform Bill Explanatory Notes:
Page 22 145. Paragraph 64 amends the State Pension Credit Act 2002 so that a member of a couple who has attained the qualifying age for state pension credit may not receive state pension credit if the other member of the couple has not attained that qualifying age. This is to ensure that all claimants who have not attained the qualifying age for state pension credit are required to claim universal credit and, if appropriate, be subject to work-related conditions of entitlement. Pensioners who reach qualifiying age and are single will be able to claim Pension Credit.

At the moment I receive Pension Credit but it looks as though this will change soon as my wife is ten years younger than myself and with her retirement age going up we will not qualify again until I am 76, this will make for a poverty stricken retirement.
Thanks a lot Cameron!!!

This government is about to hurt some pensioner couples who are receiving Pension Credit, if an amendment in the Welfare Reform Bill goes through parliament in it's present form, see below.

Welfare Reform Bill Explanatory Notes:
Page 22 145. Paragraph 64 amends the State Pension Credit Act 2002 so that a member of a couple who has attained the qualifying age for state pension credit may not receive state pension credit if the other member of the couple has not attained that qualifying age. This is to ensure that all claimants who have not attained the qualifying age for state pension credit are required to claim universal credit and, if appropriate, be subject to work-related conditions of entitlement. Pensioners who reach qualifiying age and are single will be able to claim Pension Credit.

At the moment I receive Pension Credit but it looks as though this will change soon as my wife is ten years younger than myself and with her retirement age going up we will not qualify again until I am 76, this will make for a poverty stricken retirement.
Thanks a lot Cameron!!!

Frankly this is another fine mess the Government has got itself into. I have no sympathy for them and suggest their proposals are so flawed that they are worse than the system they are replacing - which is quite bad enough!

I cannot believe this government's way off handling this matter of only new pensioners receiving the new fixed rate. We all pay the same tariff of Income Tax and National Insurance and therefore should receive the same benefits.
In particular the women who have bought up children and did not have enough contributions to gain a full pension. I suppose it doesn't surprise me really as the government did this on Student Loans. Existing loans will not receive the benefit of the higher rate before having to repay them, only new loans taken out which I believe for courses taken out in September 2012.

It is scandalous that existing pensioners who have paid full contributions over 40 to 45 years should be less well treated than people who have only paid a limited number of contributions over recent years.

i have worked for 50years and never claimed dole i think a referendam on this totally illegal proposal should be undertaken

I can't believe that this will really happen - that existing pensioners should be left out.  It would be totally unfair.  Surely no government will risk losing all the silver voters by supporting this ridiculous proposal.

In fact there has already been a major pensions discrepancy since April 2010. Prior to then, males contributed to. or were credited with National Insurance for 44 years, and females for 39 years to qualify for the full basic state pension.However,for those who retired AFTER April 2010, the qualifying years of contribution for a full state pension have been only 30 years for both sexes, but once again,this does not apply to existing pensioners.The effect of this is that all males and females who paid or been credited with over 30 years contributions, but less then the full 44 or 39 years, currently are subject to a deduction from their state pension for each missing year, so they can get a lot less then a new pensioner. Of course, we also now have the situation whereby someone who has never worked in their life, and there are plenty of them, can still get the full pension based on 30 years National Insurance credits. This legislation was introduced by the former Labour government, but so was Pension Credit and Minimum Income Guarantee, which were introduced to help those who fell through the net of less than 44/39 contributions.
Regarding the new pension proposals, many may have heard the amout of £140 a week being bandied about as something that was imminent.This 'rumour' then slid to sometime during the present government, and then jumped to £155, but probably not untl 2016,which is after the end of the present government's term.Why the changes?
Simply because someone apparently bit more mathematically endowed than Vince Cable, had a closer look at Labour's Minimum Income Guarantee through Pension Credit, which is currently £132.60. As this rises annually with cost of living, it does not take a work out that the CON/DEMS original suggestion of a minimum pension of £140 for all by 2015, would be LESS by the time it was introduced, than already legislated and introduced by Labour! Hence the revised 'suggestion' that the new rate could be £155! (with allowance for inflation!).Even more clever is the plan to abolish Pension credit, but those receiving it will not get the new pension rate. A previous comment is probaby correct in thinking that the Government is hoping that before 2016, NHS cuts, unaffordably high cost of food, and fuel poverty will have killed off a lot of us existing pensioners.

I too have worked for 42 years and paid in full NI all that time. How obnoxious to sit in an office with other hard working staff only for a visitor to be delitied that her in and out of work husband will just qualify for full pension now its only 30 NI's required. He is not 55 and not intention of looking for a job!!! Can I have a rebate of my extra 12 - no chance it paying for him. Come on we have paid in so pay us out!!!

Simple solution: pensioner power at future elections.

I was intrigued to learn that the new proposals will only fully come into effect in 2067. Perhaps they should retitle the green paper 'A pension for the last third of the 21st Century'!

I wonder what the chances are of this leading to the sort of riots that are happening in Greece? Or will we simply let them roll all over us again?

Why do I always feel the urge to shower after seeing those in power talk on thwe TV to the rest of us? On the very rare occasions I have had the pleasure to meet them and shake thier hand, I alwayss feel it is expediant to count my fingers in case any of mine have stuck to thier sticky digits.

Dear Edward H,

Not so simple. It's easy not to vote for someone..., but very difficult to find someone else worth voting for instead!!!!!

Is there any organisation out there, representing existing pensioners, who is actually doing something about this? - I've picked up on Age UK doing something on behalf of women who will have their pensions deferred without chance to catch up in their financial provisions, but what about ALL pensioners who will not qualify for the new flat rate, having paid up for 40 years, and being relegated financially to a discriminatory second tier of pension? Are people unaware of this bombshell - or are they just looking after their own selfish interests, hoping that the 'oldies' will just be apathetic and disappear when it comes to future elections?

Dont forget though that women pensioners now are receiving 6 years more pension life than those that will be on the new rate[ over£30000],and men 1 year[ £5200],so its not as unfair as it first sounds to most people

You can't have age discrimination, race discrimination, or sex discrimination. So how come you can now have pension discrimination? It should be gaainst the law, you can't have two pensioners, on different rates.

I couldn't agree more. We have worked hard, paid all our dues and now we are being stabbed in the back. It is totally criminal that the new pension rate will not be paid to existing pensioners. I missed out on two counts. One that I didn't start to pay a 'full stamp' until I was almost 50, having paid the 'married woman's stamp' until then. When you are bringing up a family and have a mortgate every penny counts. When I tried to buy back years I was told that unfortunately I couldn't, I didn't meet the criteria. When I tried to claim for the years that I was bringing up my children, again, I didn't meet the criteria. How convenient! Let us hope that we can all get together somehow and DO something to change things.

The present day pensioners are having a hard time and yet they will not be included within this reform that would have boosted their meager pensions.
Gordon Brown and his team deliberately ruined quite a lot of peoples private pensions and consequently most will have little or no money in the pot to retire on.
This blatant act of discrimination should be reversed and existing pensioners should be given the increase. After all, they won't have that long to live will they, so they are not likely to bleed the system dry are they ?
Most will have worked all their lives and paid into the system anyway.
If our government stopped aiding foreign countries and started looking after our own, I suspect that these pensions could be given to everyone, but as we all know, politicians are all liars and are only in it for themselves.
Name me one MP who is actively campaigning to put this wrong right !

OK so how much do the pensioner relatives of the government get then. I bet they wont tell you that, and of course non of them will be means tested.

I agree - we duly paid our taxes and put in the hard graft - how can they even 'THINK' about doing this?????

Pensioners and middle Englanders will let the Government know at the next polls.

 Surely you are not surprised with the new set up.

Over forty-years ago a mother returning from maternity leave was told to pay the small stamp as her husbands contribution would be adequate to meet her requirements on retiral.  Not true my wife was told she had no pension as she had not paid sufficient - the contributions prior to motherhood were ignored.

We had to pay a voluntary contribution to receive a nominal payment. Sometimes I wish she were an imigrant so she could receive about five times what she receives!

I am about to retire in about two and half years.I guess i feel like most other pensioners that we have been totally let down by this make shift load of moronic idiots known as the coalition. I think they should be made to live on what they are trying to dish out. what use are these wasters to this country!!!

You had better BELIEVE IT. And if you have any notion of retiring to one of the so-called Commonwealth Countries (Headed by HM) your UK state pension with remain forever at the rate current on the date you left 'Good Old Blighty'! No more index-linked rises! But go to any other foreign country and you will lose bugger all. Good old Aunty Mary Britain!

I have been a tax paying law abiding citizen all my life, but I am so incensed about these pension proposals ... I would be happy to go along on any demonstration, anywhere, any time. Students and Teachers make their views known via demonstrations which are then shown on the media .... I think we pensioners need to get the total unfairness of a two-tier pension system out into the media with a protest rally or march to Number 10 Downing Street. What else can we do other than write to our MPs, which we know is totally useless because they just send a computerised "thank you for your comments" letter back, and then throw it in the bin. Politicians look after themselves first..!! Surely this proposed unfair system is against our Human Rights as we Pensioners are being discriminated against big time. Will Age UK take this to the European Court of Justice on our behalf? We are the most down trodden and poorest pensioners in Europe and need all the help we can get. Viva La Revolution..!!!!

I agree that we who are over 60 should get together to take action for ourselves and those who will achieve age 60 in the future. We deserve financially equitable consideration with regard to the state pension.
I feel that we should take action in whichever way we can. After all, we are the largest group of voters and potentially one third of the total number of the electorate in the UK. Perhaps we should have our own union/political party in order to get things done?
The "Age UK" organization would seem to be an obvious place to begin when asking the question, "What are you doing, or what do you propose doing about the proposed state pension alterations which will cause inequality among pensioners by raising the state pension to a flat £140 (or £155) per week for some?"
It is about time we pensioners organised ourselves to make some real changes by using our latent power at the ballot box!!

ARE YOU ANGRY about the financial inequalities that we pensioners are enduring, and have endured for years? Of course you are. So am I!!!
If we are going to be effective in changing things for ourselves, and for those who will retire after us, we need to take action NOW. Tomorrow might be too late for some, eh?
How do we do it? Well, we need to put pressure on in the right place in the most effective ways, don't we?
Could "Age UK" help? Yes, I think so. We (people aged over 60) need to 'mobilise' and come together to become a cohesive force to be reckoned with by government.
For example, if we were an enormous union or political party things would change. We would then have some"TEETH".
People aged over 60 in this country are THE LARGEST voting group in the UK.
We are approximately ONE THIRD of the total electorate. WE ALREADY HAVE LATENT POWER to get things done. We just need to get together and act together.

Thr National pensioners Convention are campaigning against the Government's plans. Well worth supporting. They are also trying to persaude the BBC that the pensioners should appear on Question time. Apparently the BBC feel that they are not capable of coping. Odd that the chairman is an OAP himself! Maybe the BBC need a lesson too.
And if you want to demonstrate about the Government's move to switch from RPI to CPI to save money, then look at the NPC who will be demonstrating outside the law courts in late october when an application for judicial review is to be heard.

bring it ill be the first to sign it highway robbers our government nothing less

I am 72, because I had to stay at home while my husband was in the navy, looking after our children, my pension is £60 pw, because he has a service pension I cannot get credits!!!!!! I thought women were supposed to be treated as equal, how unfair is this! please AGE UK do something about this or should we all unite and refuse to vote when the time comes.

Once again - one rule for MPs and another for the rest of us. The Government continual meddling with pensions are illegal. Age discrimination and human rights are 2 issues that should be taken to the European Court.

i cannot see where the new government reforms are. i am a woman born 25 -12 -53 my pension forecast before was the 6-3-19 it is now 6-3-19 well done i.d.smith. my husband retires august 2014 so he will only get the old pension rate after working since 1964. vote tory i do not think so.

Lots of emotion flying wife and I (currently 56) will both have to wait until we are 66 before we get a penny whereas many older people will be/are getting years' of pension when they start/started at a younger age than 66. Can somone produce a clever chart that shows the early losses and later gains? In our case, I reckon we will only 'break even' by our late seventies.

I am furious I will not get my state pension next year age 60 as I had planned for years.. I must now wait till I am 64.and a half..If I had had sufficient warning this would not be quite so immoral.  Now I must use my hard earned savings...Disgraceful. Daylight robbery.

I just wonder if there is a way the Government could be challenged in Court over the new State Pension due to come in effect in 2015.  The fact that the new ruling is so unfair for existing pensioners, many of whom will have paid for more years of NICs than those receiving in excess of £200 more each month when the new pension comes into effect.
If there is anyone out there who knows the Law in these matters, please reply.

This article talks about women who have had a break from work to bring up children being badly affected by the current system.  Have I misunderstood something?  Surely they get HRP (Home Responsibility Protection) credits for the time they get Child Benefit but are not working.  The HRP credits reduce the number of years they are required to work to get a pension - which is actually better for them, in some circumstances, that getting NI credits for the same period of time.

You are quite right, Driver44. Women in receipt of family allowance who stayed at home received full credit towards the old age pension.  The losers were people like myself who worked part time and paid insufficient contributions because of working too few hours. We go no credit for being at home part time with the family.  The difference is never made clear.

The government seems vindictive towards 'baby boomers' with some idea that we have gold plated work pensions.  When my husband retired 11 years ago his work pension of £12500 seemed adequate, but we are really struggling now.  An extra £40 a week each would only restore the lifestyle we had when he retired.  Food, fuel and petrol have all gone up so much.

Many of those in their fifties and early sixties  have already retired having made sure they have a 30 year contribution record, not making any present claim on the state, and now find themselves short of the new 35 year requirement.
This would be fair enough were it not for the fact that anyone of a similar age and with a similar contribution record who is presently claiming any sort of long term benefit will be continuing to get NI credits which should put them comfortably over the 35 year hurdle by the time they reach retirement age. 

How can it be fair that those who believed in good faith that they had secured their full pension and who are presently no burden on the state (and might actually be paying a significant amount of tax), see their contemporaries who are making a claim on public funds end up with a higher pension?


Those affected are being told that they will have to dig deep into their own pockets to buy additional years after they have acted in a wholly responsible way. In many cases these will be people who have retired early on modest incomes for any number of reasons, including poor health, but they have nevertheless made what they thought was proper provision for themselves without intending to make any claim on the state prior to drawing their pension. They now see the prospect of others who have not done this - for whatever reason - .getting preferential treatment