The Pensions White Paper set out the Government's proposed reforms to pension provision in the UK in light of the Pensions Commission's recommendations. It proposed reforms to state pensions and the introduction of new personal accounts to encourage private pension saving. This article examines the proposed changes to state pensions and assesses who will lose and who will gain from their implementation. The largest gainers, on average, are women: they will gain more from changes to credits for both the Basic State Pension and the State Second Pension, and - because they tend to live longer - also from the earnings indexation of the Basic State Pension. Those on higher earnings will see a smaller increase in their state pension as a result of cuts to the State Second Pension, while those on lower incomes will lose from a cut to the generosity of the Pension Credit Savings Credit. There is still substantial uncertainty over whether these reforms will last, particularly as they are likely to have significant tax consequences as from 2020 onwards.
Authors
Carl Emmerson
Carl, a Deputy Director, is an editor of the IFS Green Budget, is expert on the UK pension system and sits on the Social Security Advisory Committee.
Matthew Wakefield
Matthew is Associate Professor at the University of Bologna focusing on consumption and savings choices and how policy affects them.
Gemma Tetlow
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