The Association of British Insurers has called on the Government to do more to help those affected by the “perfect storm” of state pension reforms.
Speaking to the Work and Pensions select committee yesterday on state pension reform, ABI director-general Otto Thoreson said he supports the principle of the reforms but certain groups require “special attention” and the Government must make greater transitional arrangements.
In January, pension minister Steve Webb unveiled plans to introduce a flat rate state pension of £144 a week by April 2017. His reforms will also end the system of contracting-out where members could opt out of the state second pension in return for a national insurance rebate.
There are concerns that women who retire before the reforms are introduced will receive a smaller pension than men of the same age who retire following the changes and those who contracted in to the state second pension will be worse off than those who contracted out.
Thoreson said: “As you start to look at those affected there is a hierachy and we need to think about what we can do. The ones I am most concerned about are those who are lower earners who probably don’t have other means to support them in retirement with fewer options and choices.
“There are also those who will find themselves particularly disadvantaged such as the obvious gender difference and the coming together of lots of legislative change at once to create the perfect storm for those affected.”
Labour MP Glenda Jackson said there would be “automatic animosity” from those who could lose out with some people feeling “cheated”.
Speaking alongisde Thoreson, NAPF chief executive Joanne Segars said: “If we can introduce transitional arrangements then we should, but we should remember there are many more gainers from this policy than losers.”