Chancellor George Osborne confirmed the introduction of the single-tier state pension would begin a year earlier in 2016/17, meaning defined benefit members could no longer contract out, and would have to pay more national insurance.
He said: “The single-tier pension will help the low paid, the self-employed and millions of women most of all.
“Of course, if there’s no longer the old state second pension, there’s no longer anything to contract out of.
“For employers that means paying the same employer national insurance as those without DB schemes.”
Mr Osborne said while private sector employers can adjust their pension benefits to accommodate the extra cost, but public sector employers will have to absorb the burden.
He said: “Public sector employees, and the relatively small number of private sector employees in DB schemes, will from 2016 pay more national insurance then they do today.”
The Budget 2013 document also confirmed parliamentary reports brought out earlier this month that the government will introduce a £72,000 cap on reasonable care costs and extend the means test from April 2016.
Adviser view
Dominic Basilea, founder of Hertfordshire-based Aqua Wealth, said: “Pensions is a complicated subject. Attempts to simplify it are a good thing. The increase in NI contributions for those in defined benefit schemes had to be done eventually.”
