Government one step closer to introducing new State Pension this year
Government will fully index public service pensions for workers reaching State Pension Age from April 2016 to 5 December 2018
In response to the introduction of the new State Pension in April 2016, the government will continue to price protect the Guaranteed Minimum Pension of public sector workers.
This means that those who reach State Pension Age on or after the 6th April 2016 and before the 6th December 2018 – when the State Pension Age equalises – will receive a fully indexed public service pension for their whole life.
This will ensure public service pension payments to these individuals continue to be equal between men and women.
The government is committed to ensuring older people can live with dignity and security in retirement. The introduction of the new State Pension in April this year will radically simplify state pension provision, making it easier for people to understand what the State will provide in retirement.
As well as simplifying the system, the new State Pension will remove the inequalities in the current system whereby some groups, such as women and the self-employed, tended to build up low amounts of Additional State Pension.
As part of these changes, this complicated, earnings related element of the current system, is being abolished. To manage the transition to the new state pension, the government will continue its current practice of fully price protecting the Guaranteed Minimum Pension of public sector workers where the Additional State Pension uprating rules do not apply.
The government, as a large employer, has considered how best to address the implications of changes resulting from the introduction of the new State Pension, for public service pension schemes and their members, taking into account historical commitments made by previous governments.
The government is expected to launch a consultation this year on how to address this issue in the longer term, recognising the increased value of the new State Pension, and seeking to balance simplicity, fairness and cost for members, public service pension schemes and the taxpayer.
Published: 1 March 2016
From: HM Treasury