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Pensions: Steve Webb defends reforms for new spouse claimants | |
(about 1 hour later) | |
Pensions minister Steve Webb has said plans to reform the pensions system will save hundreds of millions of pounds in the long term. | |
From 2016, entitlement to a state pension will depend on an individual's own contributions, rather than the employment record of their spouse. | |
Ministers said some 200,000 overseas residents receive this payment at a cost of £410m a year. | |
But the change will equally affect spouses in the UK. | |
The measure to be announced in the Queen's Speech on Wednesday will not affect existing claimants. | |
'Odd situation' | |
The Pensions Bill will introduce a new flat rate pension based on individual contributions during a person's working life. | The Pensions Bill will introduce a new flat rate pension based on individual contributions during a person's working life. |
Current rules allow spouses who have not paid their own National Insurance contributions to claim a "married person's allowance" of up to £66 per week based on their husband or wife's history of NI contributions. | |
Mr Webb said some of those claiming a married person's allowance had never been to the UK, and this was unfair. | |
He defended the fact the government had focused on people living abroad who are married to British citizens - even though the policy will affect people in this country too. | |
The minister said he was highlighting the issue because the number of women in the UK claiming a pension based on their husband's record is falling steadily, while the number overseas is rising. | |
"We've got this rather odd situation where more and more of these pensions based on a spouse's record are people who may never have put anything at all into the system in the UK. | |
"It's not about their nationality, it's about whether they have put into the British system," he told BBC Radio 4's World at One. | |
He said of more than 200,000 pensions paid outside the UK, more than half of them were to people who had "never put a penny" into the British system. | |
Mr Webb said rules would now apply equally abroad and in the UK. | |
"These changes will affect fewer and fewer people in the UK - because if you've spent your time here you build up a pension yourself - but they are affecting more and more people outside the UK who have never put anything into the system and that seems to us not fair," he said. | |
When asked if he highlighted the issue now to appeal to voters who were disillusioned with "help given to foreigners from the UK benefits system", he said: "Not at all - we are publishing the bill on Thursday... and we're looking at aspects of the system that we think are not fair that we are changing." | |
'Limited impact' | |
Former Conservative Party chairman David Davis said: "We should be very very careful we don't create injustices" for future generations. | |
However, Tom McPhail, head of pensions research at Hargreaves Lansdown, said that, as the current pension system is being replaced anyway, Mr Webb's plans would have a limited impact. | |
"From 2016 onwards the state pension will be based entirely on your individual record and there will be no inheritance of state pension rights," he said. | |
British pensioners and their families who currently live overseas and make such claims would not be affected. | |
Norman Cudmore, who served in the RAF for 22 years and worked overseas for another 16 years, lives in the Philippines with his Filipina wife. | Norman Cudmore, who served in the RAF for 22 years and worked overseas for another 16 years, lives in the Philippines with his Filipina wife. |
"I have contributed to the UK pension scheme for all those years and will qualify for a state pension. I did this so my wife would have some security when I finally pass away," he told the BBC. | "I have contributed to the UK pension scheme for all those years and will qualify for a state pension. I did this so my wife would have some security when I finally pass away," he told the BBC. |
The government's overhaul of the state pension system will see a single-tier pension - of £144 a week at today's prices - being paid to every qualifying new pensioner from April 2016 at the earliest. | The government's overhaul of the state pension system will see a single-tier pension - of £144 a week at today's prices - being paid to every qualifying new pensioner from April 2016 at the earliest. |
While many people will gain as a result of any changes, some who currently pay into a second state pension - which is being abolished - will lose out. | While many people will gain as a result of any changes, some who currently pay into a second state pension - which is being abolished - will lose out. |