IN a radical shake-up of the basic state pension system, pensioners are set to receive a flat-rate of £140 a week, the government is set to reveal today.
The pension reforms, to be unveiled by work and pensions secretary Iain Duncan Smith, are aimed at simplying the current complex system made up of a basic state pension, based on years of national insurance contributions, and a range of secondary “top-ups”, including pension credits. A range of top-ups added to the basic £96 weekly state pension are supposed to guarantee a minimum income of £132.60 for a single person, but many people miss out due to confusion over their entitlements.
Duncan-Smith says the “single-tier” retirement payment would remove confusion for those approaching retirement, as well as help to reduce inequity. Women often lose out on a full state pension because they take time out from the workplace to raise children. Last month, DWP figures suggested that this leaves women an average of £2,000 a year worse off than men.
The Coalition has already made changes to the rules on private retirement savings, abolishing the default retirement age and introducing automatic enrolment for private pensions.