Government plans state pension rise

Source : Press Association
Published on 01 November 2010 10:00 AM

The state pension could be increased to about £140 a week under Government plans to ensure everybody has a 'decent' income in retirement.

Ministers are drawing up plans to sweep away the means-tested system and introduce a new flat-rate pension worth considerably more than at present.

The basic state pension is currently £97.65 for a single person and £156.15 for a couple.

Means-tested top-ups for the poorest ensure single pensioners have an income of at least £132.60 and couples get £202.40.

Scrapping the complicated and expensive system is expected to save enough money from reduced bureaucracy to pay for the £140-a-week pension.

The move would benefit everybody in retirement, including the better off.

But it would be a particular boost for women, many of whom lose out on the state pension after taking time out of work - and national insurance contributions - to bring up children.

Ministers hope to implement the new system before the next general election, scheduled for 2015.

It is being worked out by Work and Pensions Secretary Iain Duncan Smith and Pensions Minister Steve Webb. A Green Paper is to be published later this year.

A spokeswoman for the Department of Work and Pensions said: 'The Chancellor has confirmed that the Government will improve the quality and accessibility of pensions in the Spending Review period.

'We will be bringing forward proposals for reform in a Green Paper later this year.

'Our aim will be a simple, decent state pension for future pensioners, which is easy to understand, efficient to deliver and affordable.'

Commenting on the planned reforms to be made to the state pension, Michelle Mitchell, Charity Director at Age UK, said:

'Press reports that the Government is proposing to improve the quality and accessibility of pensions will be welcomed by older people across the UK, many of whom may not be receiving the financial support to which they are entitled. The fact that up to 1.6 million pensioners are missing out on up to £2.93 billion of Pension Credit each year is testimony to the fact that the means-test system is failing to reach some of the poorest pensioners in the country.

'Linking pension entitlement to residency, rather than years of National Insurance payments, will be particularly helpful for women who are more likely to have gaps in their National Insurance contribution histories because of child care or caring for older relatives.

'We look forward to a more detailed analysis of this significant financial reform, and its impact on people in later life, which will enable us to identify those who will benefit from the transformation of the pension system, and those who could potentially miss out.'

Copyright Press Association 2010

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