Govt moves to help low paid workers excluded from state pension

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The Government is exploring how to help low paid part-time workers build up entitlement to the new single-tier state pension.

Pensions minister Ros Altmann has come under pressure in recent weeks as the full extent of those who lose out from the changes has become clearer.

Only 45 per cent of people will get the full amount, around £150 a week, when the new system comes in from April 2016.

State pension entitlement is based on National Insurance contributions. Under the new rules, employees build up entitlement from 10 years of contributions, with the full amount awarded for 35 years’ contributions.

But workers have to earn at least £112 a week from a single job before a NI record begins to be built up. Even if all the jobs combined total over £112 a week no state pension entitlement is built up.

But the DWP has confirmed it will be addressing the issue.

A spokeswoman says: “The pensions minister has commissioned work to consider potential measures to help people with low-earning multiple jobs to build up a National Insurance contributions record.

“This work is ongoing and will need to take account of the roll-out of Universal Credit and the new state pension which may have significant implications for further reform in this area.”

Independent pensions expert Alan Higham says: “It’s absolutely correct to do this. Ros has inherited some problems and we shouldn’t blame her for everything.”

He adds: “One of the flaws of the new system is if you are out of work and claiming jobseekers you get a NI credit, but if you’re in work and below NI credit you don’t get any contribution. It’s also worth noting there are more women with multiple low paid jobs than men.”