A single-tier pension: what does it really mean? - The Institute For ...
A single-tier pension: what does it really mean? - The Institute For ...
A single-tier pension: what does it really mean? - The Institute For ...
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A <strong>single</strong>-<strong>tier</strong> <strong>pension</strong>: <strong>what</strong> <strong>does</strong> <strong>it</strong> <strong>really</strong> <strong>mean</strong>?<br />
group in particular, the abil<strong>it</strong>y to derive rights from one’s partner’s contributions<br />
remains especially important.<br />
To help clarify some of the points mentioned in this section, Box 2.2 describes –<br />
for some illustrative individuals w<strong>it</strong>h particular career histories – <strong>what</strong> state<br />
<strong>pension</strong> income people will receive under the current <strong>pension</strong> rules.<br />
2.3 Pension income received under the current<br />
system<br />
In March 2012, the average weekly state <strong>pension</strong> paid to those aged 65–69 was –<br />
in 2013–14 earnings terms – £111.83 (the average was £129.50 for men and<br />
£95.57 for women). 23 <strong>The</strong>se figures are well below the maximum possible<br />
amount that men and women of these ages could have accrued if they had a full<br />
record of contributions to the BSP and second-<strong>tier</strong> state <strong>pension</strong>. Our calculations<br />
imply that the maximum state <strong>pension</strong> ent<strong>it</strong>lement someone from this group<br />
could have accrued is around £282. While these lower levels of <strong>pension</strong> in receipt<br />
arise largely because most individuals will not have been continuously employed<br />
throughout their working-age years, they also reflect the fact that large numbers<br />
of people have spent periods contracted out.<br />
As female labour market participation has increased over the past few decades,<br />
the number of women qualifying for a full BSP has increased, and reliance on<br />
derived <strong>pension</strong>s is decreasing. Furthermore, a change to the BSP affecting those<br />
retiring after 2010 reduced the required number of years of NI cred<strong>it</strong>s to qualify<br />
for a full BSP from 39 to 30, so state <strong>pension</strong> ent<strong>it</strong>lement should be higher<br />
particularly for later cohorts of women. DWP estimates that, by 2015, around<br />
85% of women will qualify for a full BSP in their own right. 24<br />
23 Source: http://tabulation-tool.dwp.gov.uk/5pc/sp/tabtool_sp.html.<br />
24 Department for Work and Pensions, 2006.<br />
14