Baroness Altmann has been sourcing views on winners and losers from the state pension reforms, suggesting changes could be made to the structure of the planned single-tier pension.
Altmann used her maiden speech to the House of Lords today to reveal that she has spent a large part of her time in her new role sourcing submissions on winners and losers to the state pension reforms, which some industry experts have interpreted as indicating possible amendments to the policy as currently proposed.
The government has not published firm details on the likely amount of the new single-tier pension, which is due to come in next April. The policy is likely to dominate the early years of Altmann’s period of office given the millions of people who stand to receive less benefits under the new system, and substantial numbers who will be better off but will perceive they have lost out.
Research by Hymans Robertson has shown that a typical low earner in their early 50s with a relatively full work history who has always been contracted in and has little or no private pension provision will lose up to a quarter of their state pension entitlement as a result of the changes. Contracted-out individuals, who by definition already have pensions, are net gainers from the new system.
Altmann said: “Unfortunately, the new state pension has not yet been properly understood. This is mainly because of the complexity of contracting out, and we need to communicate this more clearly. I absolutely agree with the noble Lord, Lord Stoneham, about the importance of communication. This is an area on which I have already spent an enormous amount of time in my new role. I reassure my noble friend Lord Kirkwood that among the plethora of briefings that I have requested from my team, I have already asked for submissions on winners and losers.”
Hargreaves Lansdown head of pensions policy Tom McPhail says: “Steve Webb took the policy so far – not to detract from what he did. But we know this is unfinished business. It seems inevitable that Ros Altmann will have to spend a lot of energy and time getting this policy over the line.
“The winners and losers are so diverse – and the articulation of benefits was already a mess. The challenge will be to change things without it costing more.
“So does Ros manage that by tying it in with an increase in state pension age, which saves the government a lot of money?”
Towers Watson consultant David Robbins says: ”It is hard to see how much she is going to be able to do given the formula has been set in statute.”