Tuesday, 19 January 2016


1908 - age 70
The first state pension in the UK was the Old Age Pension. The law was passed in August 1908 and the first pensions paid on 1 January 1909 to around 500,000 people aged 70 or more. It was 5/= (five shillings or 25p) a week and was paid in full to individuals aged 70 or more with an annual income of £21 a year or less reducing to nothing at an annual income of £31 a year.  A higher pension of 7/6 (62.5p) was paid to a married man. At the time only one in four people reached the age of 70 and life expectancy at that age was about 9 years.

1925 - age 65
In 1925 a new kind of pension was introduced based on contributions paid at work by both the employer and the employee. It was paid from age 65 without a means-test. A married couple's rate of pension was paid if both spouses were aged 65 or more. That meant men whose wives were younger than they were had to wait for some time after they reached 65 to get the higher rate for their wives.

1940 - men age 65, women age 60
In 1940 pension age for women was cut to 60 to try to ensure for most couples that the married rate would be paid as soon as the husband reached 65. 

1948 - retirement condition added
From 1948, men had to retire as well as reach 65 to claim the new Retirement Pension paid under the National Insurance scheme. If their wife was still under 60 when they reached 65 and retired they could now claim a dependant's addition for her. When she reached 60 she could claim a married woman's pension of around 60% of the full rate. 

1995 - women's state pension age to be equalised
Following pressure from Europe, the Conservative Government under John Major was forced to announce plans to equalise state pension age for men and women. The decision was put off at least once for fear of adverse public reaction. The timetable for change was the most relaxed possible and would raise pension age for women from 60 to 65 over a ten year period from 6 April 2010 to 6 April 2020.

2007 - rises for men and women to 66, 67, 68 planned
Rising life expectancy led the Blair Labour Government to pass a law to raise state pension age to 66 between April 2024 and April 2026, then to 67 between April 2034 and April 2036 and to 68 between April 2044 and April 2046.

6 April 2010 - women's state pension age begins to rise
The first women are affected by the equalisation changes. Women born 6 April 1950 to 5 May 1950 have to wait until 6 May 2010 to reach state pension age, a delay of up to one month.

Entitlement to Pension Credit for men and women became linked to women's state pension age rather than the age of 60. A similar change restricts entitlement in England only to free bus travel. Entitlement to Winter Fuel Payment is also linked to women's state pension age and the qualifying date for the payment in winter 2010/11 moves to 5 July 2010. It would then rise by six months each year.

May 2010 - further change promised
In opposition the Conservative Party had announced it would raise pension age for men and women more quickly than existing plans. After it came to power in the Coalition government with the Liberal Democrats in May 2010 this pledge was repeated in the programme for government set out in the Coalition Agreement.

"We will...hold a review to set the date at which the state pension age starts to rise to 66, although it will not be sooner than 2016 for men and 2020 for women."

October 2010 - revised changes
The commitment in the Coalition Agreement fell foul of EU equality laws which allowed the government to equalise state pension ages as late as April 2020 but would not allow further discrimination between men and women during that process. So in the Spending Review of October 2010 the plans were revised. Women's state pension age would now be raised more quickly to reach 65 in 2018 and then both men and women's pension age would rise to 66 by 2020. Critics pointed out that plan breached the Coalition Agreement promise of 'no sooner than...2020 for women'.

2011 - Pensions Bill sets out the planned changes
In February 2011 the detailed timetable for change was announced in the Pensions Bill 2011. Women's state pension age would rise to 65 by November 2018 and then men and women's pension age would rise together to reach 66 by 5 April 2020. Five million men and women would face a later state pension date. But while men would have to wait at most another year, 500,000 women would have to wait longer than a year. The wait for 300,000 would be 18 months or more and 33,000 would have to wait for two years.

Widespread protests and rebellions in Parliament - which the Government defeated - led to promises by the Secretary of State Iain Duncan-Smith to introduce some 'transitional' changes to help the most severely affected women. But the Pensions Bill went through almost all its stages in Parliament with no details of what the Government would actually do.

On Thursday 13 October 2011, the last possible date, the Government announced its plans. It would cap the delay for women at 18 months. It kept the rise to 65 by November 2018. But would then stretch out the transition from age 65 to 66 for both men and women by an extra six months. It will now be completed in October 2020. The concession will cost £1.1 billion (at 2010/11 prices), half of which will be spent on stretching the timetable for men, none of whom had complained.

On Tuesday 18 October 2011 the House of Commons accepted these changes and despite a further attempt in the Lords to make further amendments the Pensions Act 2011 became law on 3 November 2011.

April 2011
In April 2011 the Government began a consultation on how it should bring forward the change in state pension age to 67 and then 68. That consultation closed on 24 June 2011.

29 November 2011
In the 2011 Autumn Statement the Chancellor George Osborne announced that the rise in the State Pension Age to 67 would be brought forward eight years to run from April 2026 to April 2028 instead of April 2034 to April 2036. That change will save £60 billion.

5 December 2013
Two years later, the 2013 Autumn Statement announced the principle "that people should expect to spend, on average, up to one third of their adult life in receipt of the State Pension."

It warned that would bring forward the rise to 68 which was announced in the 2007 Pensions Act. 

"This principle implies that the increase in the State Pension age to 68 is likely to come forward from the current date of 2046 to the mid 2030s, and that the State Pension age is likely to increase further to 69 by the late 2040s." (1.122-1.123)

And admitted that one purpose of this change was to save money

"Along with action this government has already taken on the State Pension age, [this change] could save around £500 billion from pension expenditure over the next 50 years."

A paper setting out the principles also said that in future people should have at least ten year's warning of any change in their state pension age.

A review is promised by spring 2017.

19 January 2016
Version 1.00

Thursday, 31 December 2015


The Department for Work and Pensions has pulled down the shutters on Freedom of Information requests about the new state pension and the letters written to women whose pension age was postponed twice.

The DWP had been providing a lot of useful data which I used in two extensive blogposts (see links at the end of this post). But follow-up applications for further information have been refused. On the face of it they are simple enough requests.

  • How many men and women will get no pension under the new state pension rules? REFUSED
  • How many letters written to women about the rise in their state pension age were returned undelivered? REFUSED
  • What did the DWP do to contact the women whose letters were returned undelivered? REFUSED

These decisions to hide information rather than reveal it raise the question - what is so uncomfortable in the truth that the Department wants to bury it? 

Here are the details.

No state pension
Under the new state pension those with fewer than ten years of National Insurance contributions will get no pension. Under the old rules (since 2010) people with under ten years contributions get a pro rata pension of 1/30th of the full amount for each year of contributions. Under the new pension they get nothing.

Estimates for how many would be affected by this rule were published in an Impact Assessment in May 2014. But they lacked detail and were not broken down into men and women. The details are important because it is expected this rule will adversely affect far more women than men.

So on 3 November 2015 I asked for that detail. On 23 November 2015 I was told that it would not be provided "because the information is intended for publication at a future date".

On 14 January 2016 the DWP published Impact of New State Pension (nSP) on an Individual's Pension Entitlement which contains some more information (p.17). It shows that from 2016 to 2050 a total of 110,000 people will get no new State pension because they have fewer than ten qualifying years of NICs. Of those 110,000, 80,000 (73%) are women and 30,000 (27%) are men. It does not break the numbers down into those in the UK and those living in other countries.

No pension age delay letter
Part of the changes to state pension is the rise in the State Pension Age. This has hit women harder than men and data provided under FOI showed that the Department failed for 14 years to begin to inform women of changes passed in 1995. That exercise stopped in March 2011. Women's state pension age was changed again in November 2011 and the DWP then restarted the letters from January 2012 to inform women of their new state pension age including both changes. That was often the first they had heard of any change. But many women claim they never received such a letter.

A global study of data quality to be published by the credit reference and address validation agency Experian found that 23% of customer prospect data - including names and addresses - contained errors. That does not mean nearly a quarter will not arrive. But many were clearly at risk of not doing so. That raises the question of what the Department did to deal with this problem.

So on 23 November 2015 I made an FOI request to ask how many letters were returned undelivered and what action was taken when they were. On 21 December 2015 the DWP confirmed it held the information but refused the request on grounds of cost. 
I have asked for a review of this decision.

Further information

Women will get less than men from the new state pension

Women given just two years' notice of state pension age rise 

version 1.10
19 January 2016

Wednesday, 30 December 2015



Flood Re is part of a plan which is intended to ensure that homes at a high risk of flooding will be able to obtain buildings and contents insurance at a reasonable cost.

It begins throughout the UK on 4 April 2016. From that date an estimated 350,000 dwellings at high risk of flooding will be put into the Flood Re scheme.

Flood Re will be funded by a levy on all insurance companies. From 4 April 2016 all home insurance policies will include a supplement which will pay for that levy. The Government has estimated that will add around £10.50 a year per policy. It will almost certainly not be shown separately on insurance premium bills. But as part of the premium it will be subject to insurance premium tax of 9.5% which would add £1 to that amount. The levy will be reviewed in the first five years of the scheme and if it changes the supplement could change too. Almost all insurers are expected to join Flood Re and all of them, in Flood Re or not, will pay the levy based on the amount of home and contents business they do.

In Flood Re
If your home is put into the scheme by your insurer the flood risk element of your insurance will be charged at a fixed rate depending on your council tax band (valuation band in Northern Ireland). The amount for combined buildings and contents will range from £210 a year for the lowest band properties through £276 in the mid-range to £1200 a year for the highest. If you insure just the buildings or the contents the amounts will be lower. Details here 

Those are the fees that Flood Re will charge your insurer for taking on the flood risk. The insurer can pass those costs on to customers or can charge more or less than that for the flood risk. Charging less is very unlikely. The excess on the policy - the amount that has to be paid by the insured in the event of a claim - will also be fixed at £250 on this flood risk element. But again your insurer can charge whatever excess on this part which it chooses.

The rest of the insurance against all other risks will be estimated and charged as normal by your insurer on top of the amount for the flood risk. There is no guarantee what these premiums will be or what excess will be charged. The premium you pay will include all risks, including the flood risk passed to Flood Re, and you will not see those as separate elements in your premium. 

Your home will only be put in the scheme if your insurer chooses to do so. It is not clear if there will be any mechanism to request a property is or is not put into the scheme or to appeal against a decision. 

Flood Re expects to have 350,000 properties passed to it in the first year. It claims it can accommodate more than that but it is entirely up to insurers to decide which properties to include. The Environment Agency has estimated that more than 5 million homes are at some risk of flooding.

If a claim arises for flood damage the householder will claim directly to their insurers not to Flood Re which will have no contact with consumers.

Excluded from Flood Re
Some properties will specifically be excluded from the scheme even if they are at high risk of flooding. These include

·         Homes built from 1 January 2009
·         Purpose built blocks of flats
·         Houses converted into flats. But if the freeholder lives there and there are only one or two other units it can be part of Flood Re.
·         Buy to let property where the landlord arranges insurance.
·         Commercial property
·         Mixed use property – for example flats over shops.
·         Social housing buildings – but contents can be part of Flood Re.

The rules are complex. More details from Flood Re  

It is not clear whether or at what price these excluded properties will be insurable.

May be excluded in future
Flood Re Chief Executive Brendan McCafferty has said that homes liable to frequent flooding could be excluded from the scheme if the owner did not invest in flood resilience measures. Flood Re would gather information over the next few years and decide if these homeowners could be taken out of the scheme after three claims. He also some very high risk properties that flood every year or two could be excluded from the scheme whatever steps they took.

Not in Flood Re
If your home is one of the estimated 5 million or so homes at some risk of flooding but is not in Flood Re then insurers will no longer make any guarantees about providing insurance nor about the level of premiums or excess charged on these homes. The existing deal called Flood Insurance Statement of Principles will end on 4 April 2016 when Flood Re begins.

The Statement of Principles, which in one form or another was in force since 2000, guaranteed that your existing insurer would offer insurance – though at an uncapped premium – and included all properties. From 4 April 2016 all homes not in Flood Re will be subject to normal market forces including those at risk of flooding. Insurers can refuse to insure homes at flood risk or insure them on any terms, with any premium or excess they choose. The industry hopes that firms will be able to offer insurance on all property either by putting it into Flood Re or, if the risk of flooding is low, then taking on that risk in the normal way. But whether that happens remains to be seen.

The future
The Association of British Insurers says that in the 1990s there were three flood events which led to claims of £150m or more. This century there has been one a year. Further bad weather will test this latest effort to provide insurance to its limits.

Matt Cullen of the Association of British Insurers and Brendan McCafferty, Chief Executive of Flood Re, explained the scheme from their point of view on Money Box 9 January 2016.

Version 1.2
12 January 2016

Wednesday, 9 December 2015


Are all the niggles and unfairnesses of the new State Pension there because of the pressing need to ensure it costs no more than the old one? 

I gave my evidence to the Work & Pensions Select Committee in Parliament ten days ago. Before I was questioned the MPs quizzed the former Pensions Minister Steve Webb. He lost his seat in the General Election and is now Director of Policy at the insurers Royal London.

He admitted quite frankly to the Committee that his reforms of the state pension – which begins on 6 April – had to be done at nil cost. Or as he put it “When I went to the Treasury wanting to reform the State Pension, the one thing they said to me is—and I paraphrase slightly—‘Steve, you can do what the hell you like, just don’t spend any more money.’”

In fact the new state pension will, in the long term, cost less than the present one. Job done. But the more I looked at the various groups and campaigners who are complaining about how the new state pension will treat them the more I thought that every niggling unfairness about it came from Steve Webb’s nil cost brief.

Now, without sounding too much like Meryl Streep and Steve Martin, it’s complicated. So bear with me.

1. Women born 6 April 1951 to 5 April 1953 all reach state pension age before the new state pension begins. So they won’t get the new state pension. But men of the same age – who will be 65 when it begins – will. That is sex discrimination and they want the choice to have new or old.

2. The problems of women born 6 April 1953 to 5 April 1959 were covered in this newsletter two weeks ago. They were told about their state pension age rise just a couple of years before they were 60 and their age was raised not once but twice. That didn’t happen to any men.

3. As I reported here three weeks ago women will generally do less well than men out of the new state pension. Even by the 2050s one in seven women won’t get the full amount because they don’t have 35 years’ contributions compared with one in ten men. It is also expected that more women than men will not get a pension at all because they won’t get the minimum ten years’ contributions.

4. The new state pension will not allow women to claim a pension on their husband’s contributions either while he is alive or after his death. If they have an inadequate pension of their own they will have to rely on means-tested pension credit which is itself being cut by up to £13 a week.

5. Transitional rules cut back on the new State Pension for anyone who was not paying into SERPS and the State Second Pension which topped up the basic pension. As a result many will get little more than the old state pension in the first years of the new scheme. DWP figures show women are more likely to be affected than men.

6. And finally the cold-towel-round-head rules which affect people who were in company schemes. Under these rules the DWP will no longer inflation-proof part of their company scheme through the state pension. This rule will probably affect men more than women.

All those six items cut the cost of the new state pension. And of course help it to come in under the cost of the old as the Treasury demanded of Steve Webb. All of them leave some groups – mainly women – feeling unfairly treated. Perhaps it’s a price worth paying to simplify the state pension and keep it affordable in the long term. But we should at least be clear who is paying that price.

Oral evidence by Steve Webb, me, and Sally West from Age UK.

Version 1.00
9 December 2015

Sunday, 29 November 2015


The new rates for social security benefits from April were quietly issued on Thursday 26 November in a written statement in the House of Lords by Pensions Minister Baroness Altmann. It linked to fifteen pages listing every DWP payment, what it is this year and what it will be for 2016/17. And the two columns are almost identical. Every single benefit paid to people under pension age is unchanged.

In other words all benefits – with the exceptions below – are frozen. No rise at all in April. Zero. Zip. Zilch.

There are two reasons for that. One group of benefits such as jobseeker’s allowance, income support, and child benefit are unchanged because the Chancellor announced in his Summer Budget that they would be frozen for four years saving £4 billion a year by 2019/20. The rest, such as disability living allowance, carer’s allowance, maternity allowance, and widow’s benefits, are unchanged because inflation is effectively zero. The September CPI showed a slight fall in prices of -0.1% and negative inflation counts as zero. So between these two rules all working age benefits are frozen. Children, disability, illness, widowhood, caring , unemployment - none of those merit even a 1p a week rise.

Pensioners gain
How different it is when we come to that magic word ‘pensioner’. People over the age of 63 – when women will be entitled to state pension from April – will generally find they get more from April.

Their benefits and allowances will rise. The basic state pension will go up by the rise in earnings of 2.9% from £115.95 to £119.30, an extra £3.35 a week. But, and it is quite a big but for some, all the extras paid with the state pension – SERPS, State Second Pension, extra for deferring or paying Class 3A contributions, and graduated pension – will all be frozen. A point not mentioned by the Chancellor in his Autumn Statement speech.

The full rate of the new State Pension was fixed, as predicted here a while ago, at £155.65 a week, though for transitional reasons most new pensioners will get less than that rate in the first years of the new state pension. Many will get what they would have had under the old system or a little more, especially women. Click for the full story of women doing worse than men from the new state pension.

Pension Credit for the poorest pensioners will also rise by 2.9% - up by £4.40 from £151.20 a week to £155.60 for a single person and up £6.70 for a couple from £230.85 £237.55. That will benefit 1.1m people. But most of that rise will be clawed back from the 1.4m who are slightly above the poorest level who get savings credit as well. That will leave them with only about £2.02 a week out of the £3.35 of the state pension rise. The figure for couples is keeping £3.21 from an extra £5.35. Overall the maximum income to get any pension credit is frozen at £188 single and £274 couple.

Housing benefit which helps pay for rent distinguishes between those under and over state pension age. No rise for those under - single, couple, disabled, children - all frozen. But there is a rise of 2.9% for those over pension age and even higher amounts for those over 65. Pensioners are not subject to the hated bedroom tax either.

The same rises will be found in local council tax support schemes where older people are fully protected against the cuts imposed on working age people.

Winter Fuel Payment is frozen again as expected.

But the few niggles about minor items not changed cannot hide the fact that the big social security winners are older people. As the Chancellor made clear in his speech

“The first objective of this Spending Review is to give unprecedented support to health, social care, and our pensioners.”
Perhaps that is why he gave these fifteen pages of bad news on benefits for everyone else to the Pensions Minister to quietly slip out in the House of Lords on a Thursday afternoon.

29 November 2015
Version 1.00

Friday, 27 November 2015


Stamp Duty Land Tax (SDLT) will be charged at a higher rate from April on a home you buy that is not the home you live in.

The rates charged on each band will be

£1 to £125,000
£125,001 to £250,000
£250,001 to £925,000
£925,001 to £1,500,000
Above £1,500,000

SDLT1 is the tax on the home where you live (main residence)
SDLT2 is the tax on an additional home (not your main residence)

There are some properties that are exempt including caravans, mobile homes (probably including park homes), and houseboats. Homes sold for £40,000 or less are also exempt. But for homes over that price the 3% band will apply to the first £125,000 - there is no exempt band. Here are some examples.

SDLT2 will apply to a home which is bought but which you do not immediately live in as your main residence. So if you purchase a buy-to-let property - including furnished holiday lets - or a second home for holidays or weekends then SDLT2 will apply. 

If you buy a home to live in but for some reason cannot or do not sell your previous residence at the same time, SDLT2 will be charged. If you sell the original residence within 18 months the extra tax - the difference between SDLT2 and SDLT1 - can be refunded by HMRC. This rule and timetable applies even if the new purchase is not fit for human habitation and has to be done up to live in. But SDLT2 does not apply if the property purchased is not a residential property at the time you buy it - for example a garage or a church or an industrial unit.

Someone who owns a home they live in and also owns a second home - a holiday home or weekend retreat for example or a property they rent out - will not pay SDLT2 if they sell the home they live in and buy another within 18 months which they then live in. But they will be liable to SDLT2 if they sell their holiday home or rented property and buy another. If they buy a third property it will always be subject to SDLT2. They will also be liable to SDLT2 if they buy another home to live in, move into it, but do not sell the home they left within eighteen months. If you sell your home you live in and already have a second home you have 18 months to buy a new home to live in without SDLT2 applying. 

If a home is bought jointly and one buyer owns another main residence but the other dies not then SDLT2 will apply to the whole purchase price. So for example if a parent who owns their own home helps a child with a property purchase that will trigger SDLT2 on the whole cost if the parent is registered as a joint owner. The Government intends that SDLT2 will apply to the whole of the purchase price not just the share of it owned by the person with another main residence. But is consulting on this point (Q2).

Main residence
The home you live in is called your 'main residence'. It is not like Principle Private Residence for Capital Gains Tax where you can nominate a property to be your PPR. Nor is it decided simply on days of occupation. It is a matter of fact - where you and your family spend your time, where your work is, where your children go to school, where you are registered to vote, where correspondence from government or businesses is sent. 

Couples who are joint owners of the home they share will pay SDLT2 if they buy a second property and keep the first. But if one of them wholly owns the home they share the rules are different depending on whether they are married/civil partnered or not. 

  • If they are not married/CP'd then the partner who is not an owner of the home they live in can buy a separate home without paying SDLT2 as long as one partner will live their as their main residence. 
  • If they are married/CP'd then they will pay SDLT2 on a separate home they buy. The Government is consulting on how this rule might work as relationships end (Q1).
No concession is planned for people who buy a separate home for work. For example their family lives in one part of the country but they buy a flat which they live in four nights a week for work. That second home will be subject to SDLT2.

The details will be open to consultation (Qs 3-9) as will the procedure (Qs 19-21).

SDLT2 will apply from 1 April. Completion must happen on or before 31 March 2016 to avoid it. The one exception is if contracts were exchanged on or before 25 November (Autumn Statement day) but completion is after 31 March then SDLT2 will not apply. That will apply, for example, to property that was bought off-plan. 

From 1 April purchasers will have to fill in a declaration that they do or do not own another home. The conveyancer or solicitor will use that to decide which rate of SDLT applies.

SDLT applies in England, Wales, and Northern Ireland. It does not apply in Scotland which has its own property tax called Land & Buildings Transaction Tax (LBTT). It will also charge extra charge of 3% on each band from 1 April 2016.

SDLT2 will apply equally to people who live outside England, Wales, and Northern Ireland and buy property here. They will have to fill in the same declaration on property ownership. A Scottish resident who bought a second home in England would pay SDLT2 on the purchase. As would a resident of Dubai, Germany, or Australia. 

Matters for Consultation
Some details have not been finally decided. A consultation Paper was published on 28 December 2015, though it was initially due to be published on 15 December as para 1.6 made clear when it was first published. 
That may have been delayed to avoid clashing with the Scottish government Budget on 16 December, which cost seven working days from the period allowed. Para 1.6 has now been amended in the online copy to say it began on 28th December.

Whatever the reason for the delay, it gives a very short timetable of barely six weeks. The Government's own Code of Practice says "consultations should normally last for 12 weeks".

The main area where the Government seems open to views is the exemption from SDLT2 that may apply to larger landlords, companies, and trusts (Qs13-18).

Send comments to SDLT Additional Properties Consultation

This blogpost is based on detailed conversations with HM Treasury and the Consultation published on 28 December. The final rules may change after the Consultation which ends on 1 February and will be announced on Budget Day, 16 March 2016. They will then be subject to parliamentary approval. 

Treat this blogpost as a guide and take professional advice before acting on the information contained in it.

30 December 2015
Version 1.52 including consultation proposals

Monday, 23 November 2015


In the first five years of new state pension between 45,000 and 60,000 new pensioners (2% to 3% of the total) living in the UK will get no state pension due to having fewer than ten years of National Insurance Contributions. 

In addition to those living in the UK, a further 30,000 to 40,000 people living overseas who reach state pension age in the first five years of the new State Pension will be caught by this rule and get no state pension. That is about one in five UK overseas residents who reach state pension age in that time.

Under current rules people in the UK or abroad who have paid at least one year of National Insurance and who reached state pension age from 6 April 2010 get 1/30th of the basic state pension for each year paid, which is around £200 a year.

By 2040 it is estimated this new rule, which will deprive up to 20,000 people a year of any pension, will be saving the Government £650m a year.

It is reasonable to suppose that the majority of those who get no pension will be women. They will suffer twice as under new State Pension rules they will not be entitled to a reduced pension on their spouse's contributions. Under the current rules they could claim £69.50 a week on their spouse's contributions if their own entitlement was less than that amount.

These figures from the May 2014 Impact Assessment (para.95) are approximate. No breakdown into men and women is available and the Government has refused a Freedom of Information request for them - see below. I have asked for a review of that decision.