Pension losers

The biggest losers under the new flat-rate state pension will be younger workers, says the Daily Mail.

Under the current system, ‘S2P’ earnings-related top-ups can add as much as £100 per week to an employee’s pension – but after 2016 nobody will earn any more S2P top-ups.

As is often the case, there is an element of exaggeration in the Mail’s treatment of the issue. All self-employed workers will be better off under the new system, for example. Moreover, because the old system was confusing most people were not sure what to expect. Under the new system, the maximum £155 per week pension will be earned by 35 years’ NI contributions, and if you want more income in retirement, it is up to you to save for it – with attractive tax breaks on personal pension contributions.