Pension changes ‘will leave millions of workers worse off’

The pension changes being brought in by the government will leave million of people worse off, according to the Trades Union Congress (TUC).

Those …

The pension changes being brought in by the government will leave million of people worse off, according to the Trades Union Congress (TUC).

Those entitled to a state second pension will be those worst affected and the report claims anyone with a long working history will likely lose out by as much as £2,000 a year.

When the new single-tier pension begins in April 2016, the second state pension will be abolished, although the government has said the changes will make most people better off.

However, with around 20 million people currently being a part of the state second pension scheme, which was introduced ten years ago to boost pension levels for those on low incomes, many could be set to lose out.

The TUC report says the "vast majority" of them will get less money when they eventually retire, which could leave many putting it off. This is especially worrying for those in debt as retiring could leave them severely out of pocket.

Frances O'Grady, general secretary of the TUC, said: "Many low and middle-income private sector workers, particularly those several decades away from retirement, could be thousands of pounds a year worse off in retirement."

The Trade Unions do support the single-tier pension in principle, although they believe it should be raised from the current level of £144 a week.

According to the TUC, low earners now in their late 30s will get around £30 a week less than they would get under the current arrangements and people set to benefit from the single tier pension, such as low earners and carers, will only be at an advantage when the changes first take place. In time, their retirement incomes will drop, causing them financial problems.

This shows that it is not just an issue for those individuals heading into retirement, but it also affects people who are quite a way off. It is very important to plan ahead for retirement and it is never too early to consider financial management or guidance.

By Amy White

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