Almost 60% of people retiring in 2016 will not be entitled to the full new flat-rate £155-per week State pension, claimed the Daily Mail.
And even 20 years later, one in five will still be entitled to less. The shortfall results from ‘contracting out’, where employees in company pension schemes paid a lower rate of National Insurance contributions. The full state pension is only earned by 35 years of full NI contributions.
You have to pity Pensions Minister Steve Webb, forced to defend the new system from this attack. The vast majority of contracted-out employees will have company pensions greater than they would have earned by paying more NI, so they will be better off. Fortunately, from late this year the 2.5 million people expecting to retire in 2016 will get personalised statements from the DWP telling them exactly what they can expect – though if this system is anything like the old one it replaces, in many cases the forecasts will be wrong.