22.08.12

White Paper on State Pension Reforms Expected before Year's End

The Government has confirmed it will publish a White Paper setting out details of state pension reform, later in the year.

The current system – made up of the basis state pension and various additional state pension entitlements – means the amount paid to pensioners can differ by more than £200 a week (a difference of £10,000 a year) because the level of basic and additional state pension payouts can vary from around £7 a week to £230 a week. 

According to the Department for Work and Pension (DWP), around 130,000 people get £7 or less a week and the same number of people get £230 or more a week.

This is set to be replaced by a simple flat-rate state pension for new pensioners, set above the level of the means test, currently estimated at around £140 a week.

Pensions Minister Steve Webb commented:

“The range of state pension payouts at the moment is simply staggering. The current system is so complex and would baffle even Einstein. Worse, if people have no idea what they will get, they can’t make sure they have enough savings for their retirement.

“We can’t go on play roulette with pensions. A flat-rate single-tier state pension will restore simplicity and give people certainty instead of chance. And it will provide a sure foundation for further saving.”

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