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Plans for single flat-rate state pension are published

 

A new flat-rate state pension may be introduced as part of radical plans by the Government to simplify the current system.

 

Under the proposals, which are now the subject of a green paper, new pensioners would receive a single pension worth £140 a week, although inflation could see this rise to £155 by 2015 or 2016.

 

The flat-rate would apply to pensioners who have paid at least 30 years of national insurance contributions. However, those already in receipt of state pension benefit, who have reached state pension age, will not benefit from the changes.

 

Currently pensioners receive £97.65 a week but means-tested credits mean that this can be topped up to £132.60.

 

If approved, the plans will see the state second pension rolled into the basic state pension. The contracting out of workplace pension schemes would also be scrapped.

 

The Pensions Minister, Steve Webb, said the existing system needed to be reformed to meet the demands of an ageing population.

 

‘Tomorrow's pensioners do face a very different world,’ he warned. ‘They will, on average, be working for a lot longer, they will be retired for longer, they will not on the whole have final salary guaranteed pensions in the way that perhaps their parents did.

 

‘We therefore need a simpler, clearer foundation because more of them will now be asked to save for their retirement.’

 

The state pension age is due to rise to 66 for both men and women by 2020.