Briefing Notes

Briefing Note 32 - The new 'contributory' test: principle or practicality?

The Government’s White Paper proposals contain a new contributory principle intended to solve the problems of gaps in coverage and to give women a fairer entitlement to the Basic State Pension. The White Paper proposes reducing the number of qualifying years required for full Basic State Pension (BSP) from 44 for men and 39 for women to 30 for all. Technical changes are also proposed for ways in which credits are granted for BSP and S2P to people not working.

This Briefing Note examines the reality of this new contributory principle and assesses how good a deal the proposals are for women. It finds that the proposals weaken the contributory principle. Either a contributory or residency test could make the BSP near-universal. Making the choice based on which test is easier to administer and understand is not a bad approach, although there are different views on which test would be most practical. As a result of the changes to eligibility for state pensions in the White Paper, the already closing gap between some women’s and men’s state pensions will close more quickly, but the real cash benefit for many women will be small.