The vast majority of people currently entitled to the state second pension will get less when they retire as a result of the scheme being replaced by the new single tier pension, TUC research published today (Wednesday) warns.
The state second pension was introduced in 2003 as a way to help low earners and carers get more from the state pension. Around 20 million people, the vast majority of whom are private sector workers, are currently contracted into the scheme. The second state pension will be abolished as part of the single tier pension, which comes into effect in 2016.
The TUC research models what the projected retirement incomes of people currently contracted into the second state pension will be under the new single tier pension – which has been set at £144 a week (in 2012/13 terms). The research includes various income bands, pension contribution levels and retirement dates.
The TUC report shows that anyone with a long work history will lose out under the single tier pension. While high earners lose most, people on low to middle incomes (£10,000 to £26,000) could also lose significant amounts.