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27 Aug 2013

New State Pension To Have Mixed Effect On Income, TUC Claims

According to the Trade Union Congress (TUC), changes to the British state pension system will have a mixed effect, boosting pension income for some people, but leaving others worse off.

A report issued by the TUC stated that most people with a long working life are likely to see their retirement income fall by almost £2,000 per year, compared to the money they would receive under the current pension system. Frances O´Grady, the TUC general secretary, explained that private sector workers with low and middle incomes would take the hardest blow.

By contrast, the vast majority of people retiring after 2040 will gain from the single-tier state pension, set to come into effect in 2016, the BBC informed. Overall, people with an income of around £10,000 a year will be better off, if they retire shortly after the reforms are implemented, the TUC said.

However, a spokesman for the Department for Work and Pensions, commented that the new state pension would provide a fair base and will increase the transparency and predictability of pension income. It will allow people to plan more efficiently and be prepared for their expected income in retirement.

Meanwhile, the Institute for Fiscal Studies estimated in an earlier report that on average, the new system would add £270 a year to the income for women and £81 to the sum men would receive in retirement.

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