Govt pension plans ‘will be fair to women’

The government’s plans for a new pensions settlement will have fairness for women at their heart, John Hutton said today.

The work and pensions secretary said the success of the proposals outlined in next week’s white paper would be judged against how they addressed the fact that women make up 60 per cent of those still not accruing a pension in their own right.

Mr Hutton also made clear he believed the plans would set in motion “the biggest renewal of our pension system” since the Atlee government introduced the welfare state.

“Next week’s white paper will strike a new balance of responsibility between the employer, the state and individual,” he told the Fabian Society this evening.

“It will continue to protect the poorest pensioners from poverty and ensure that all pensioners share in the growing wealth of society.

“But it will also equip each and every individual, male or female, with the tools they need to save adequately for their retirement, recognising and rewarding the contributions they make to society and helping them to build the retirement income they want and expect.”

Lord Turner’s pension commission recommended the creation of a new low-cost savings scheme to help people save, a more generous state pension paid for by a higher retirement age and a change to the eligibility criteria based on residency, to help women and carers.

The government is expected to largely accept these recommendations, although today Mr Hutton made clear it would be going further in its efforts to include women, by introducing a credit scheme in place of the residency criteria.

This would see the social work of men and women, such as caring for children or elderly relatives, given the same status in terms of pensions entitlement as financial work.

Both the proposals from the government and Lord Turner would ensure that by 2050 about 95 per cent women would receive a full basic state pension, but Mr Hutton said the former would achieve this goal faster.

Under the government’s system, he claimed 70 per cent of women would be receiving a full pension by 2010, compared to just 50 per cent under the residency system.

“At the heart of next week’s reforms will be a new contributory principle that gives women a fairer entitlement to the basic state pension more quickly, while ensuring that we value social contributions equally with cash contributions,” Mr Hutton said.

He added: “It’s also a contributory principles, which unlike a residence test, retains the crucial link between rights and responsibilities – that principle of something for something that defines the role of the modern welfare state.”

  • Last week Tony Blair confirmed that he had reached an agreement with Gordon Brown over restoring the link between earnings and state pensions. However, reports suggest the trade off was that the new system would not come into effect until 2012, two years later than Lord Turner’s plans proposed.