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15 Jul 2013

IFS Reports Single-Tier Pension System´s Impact On Various Age Groups

British workers in their 20s are not likely to see any real benefits from the new state pension that the government is trying to introduce, according to findings from the Institute of Fiscal Studies (IFS).

The report looks into the effect of the proposed changes to the UK pension system on various age groups. The reform, due to come into force in 2016, will be of benefit to many older employees, but younger workers will have to live beyond their 100th birthday to see any significant yields, the Independent reported.

Overall, the IFS reached the conclusion that most people born after the mid 1980s will lose around £2,300 a year under the single-tier state pension system. For example, an employee born in 1986 and working a low-paid job can expect to receive £21 a week less compared to what they would get under the current pension system, explained Soumaya Keynes, co-author of the report.

Meanwhile, workers closer to retirement are expected to benefit from the single-tier system, the IFS found. Those that are predicted to reap the biggest benefits are people with patchy employment records, such as women who have left work to take care of their children, the unemployed or those that work part-time and in low-paid jobs. Self-employed workers are also likely to gain from the changes, the report concludes.

UK pension minister Steve Webb commented on the findings by pointing out that the report clearly showed that those who are closer to retirement are going to benefit and will experience these positive changes soon.

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