News
Towards a new state pension
5 April 2011
The Government has launched a consultation on its proposals to reform the state pension system.At present the state pension system is made up of a basic state pension, additional state pension (state second pension ( S2P) or its predecessor (SERPS)), and pension credit. It is intended to replace this with a simple flat-rate contributory state pension, either by accelerating the pace of existing reforms or, more radically, by combining basic state pension and state second pension into a single-tier structure. Both options are estimated to produce pension income of around £140 per week.
The consultation also asks for views on whether the state pension age should in future be increased by a mechanism linking automatically to life expectancy or by periodic review.
Introducing the proposals, Iain Duncan-Smith commented: “Over the years small changes to the state pension system have turned what started as a relatively simple contributory system into a complex mess, leaving people utterly confused as to what the state pension means for them.”
Pensions Minister, Steve Webb, added: “The current state pension system is dogged by complexity and confusion, it makes it very difficult to save for retirement and leaves millions of people relying on complicated means tested support. I’m proud to bring forward proposals that will end the unfairness inherent in the system and secure a fair, decent and simple state pension fit for the 21st century. These reforms will transform pension saving in this country for millions of people.”
The Green Paper ‘A state pension for the 21st Century’ can be found here.