The Pension Policy Institute (PPI) has released a briefing note discussing why the coverage of the Basic State Pension should be improved in a bid to lessen the number of people who fail to qualify for it.
Taking into account the recent reform proposals for improving the first tier of State pension provision, the PPI claims that just reforming the level of the Basic State Pension (BSP) would have limited impact if inadequate coverage means there are still people who are not receiving the full benefit.
The PPI state the credits system, in place to “count” the people who don’t qualify for the BSP through the usual channel of National Insurance(NI) contributions, has become very complex and does not include everyone. Their figures suggest between 2002 and 2003, 4.9m people failed to qualify for the BSP.
The organisation, also claims women have suffered a disadvantage because of the work-based nature of the BSP, as many take time off to bring up children or care for relatives. But even though a husband’s NI record can be used to improve his wife’s entitlement, currently only half of women receive the full BSP compared to 9 out of 10 men.
A PPI analysis of government estimates also suggests by 2020 up to 19% of people will not qualify in each year, and up to 40% will only qualify for the BSP through the credit system.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected].IFAonline
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