Young workers to be £1,000 worse off under “flat rate pension”

Workers in their late twenties could be at least £1,000 a year worse off under plans to introduce a flat rate state pension, according to The Institute for Fiscal Studies (IFS).

The single-tier or flat rate scheme is being introduced by the government in 2016 in an attempt to simplify state pensions and will be set at around £146 per week. This change comes at the same time as auto enrolment, the flagship component of the government’s workplace pension reforms.

According to the IFS, the changes to the state pension will on average leave women £5.23 a week better off, while men will be £1.62 better off.

Those of you who are self-employed can breathe sigh of relief, as it is estimated that people who have been self-employed for 10 years will end up £7.51 a week better off under the new scheme.

It is young people who will be hit the hardest by this change though, with IFS predicting that people born in the mid-1980s could receive between £1,000 and £2,300 a year less when they retire.

You can visit the IFS website to read the full report.

With auto enrolment being rolled out already, educating yourself on these changes and how they will affect you is a vital step you should be taking. If you feel unprepared, why not have a look at our auto enrolment training seminars?

Visit the training store.

Stephanie Coward

Managing Director, HCM

Stephanie Coward is Managing Director for HCM at IRIS, where she leads the strategy, innovation and growth of the organisation’s HR and payroll portfolio. She is responsible for positioning IRIS as a trusted partner to HR professionals and ensuring its solutions support the evolving needs of modern workforces.

With more than 25 years’ experience in the technology sector, Stephanie brings deep commercial and operational expertise, with a passion for improving the employee experience through technology.

Stephanie is committed to advancing IRIS’ HCM offering and helping organisations build more resilient, empowered workforces.