View the article online at http://citywire.co.uk/new-model-adviser/article/a689812
Gov’t plans to cut pension deferral rate to save £300m
by Brian Cantwell on Jul 05, 2013 at 15:12
The government plans to halve the amount of extra state pension offered to those deferring retirement in an effort to save around £300 million.
The annual deferral rate is a financial incentive given to pensioners for deferring the state pension payments if they work beyond state pension age.
The deferral rate is currently 10%, but pensions minister Steve Webb (pictured) plans it by half to 5%.
The Department for Work and Pensions has estimated that cutting the rate could save between £200 million and £300 million.
It said: ‘We envisage that the rate of deferral will be broadly actuarially fair. At the moment, there is a financial incentive to defer that is equivalent to about 10% on the pension per year of deferral, but we believe that the right figure would be in the order of 5% although a lot depends on changes in longevity and so on.’
Aviva head of policy for corporate benefits John Lawson said: ‘We’ve been expecting some cuts in the annual deferral rate, but if these are confirmed as the figures it would be quite sharp, and more than we were expecting.’
News sponsored by:
As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.
Today's top headlines
Alastair Mundy met Citywire's Daniel Grote at the London Stock Exchange Studios for a detailed interview about the Investec Cautious Managed fund.
More about this article:
More from us
- Webb announces pension protection boost for long-serving staff
- Osborne spares state pension from welfare cost cap