Government to raise state pension and end means-testing
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The Government is to create a universal state pension of £140 a week, eliminating the current means-tested system.
The plans, set to be announced in a green paper later this year, look set to combine all current elements of the state pension, including the basic state pension and the state second pension, into one payment above the current level of pension credit. The move would address the wide-spread concerns raised that Nest would be undermined by means-testing.
Currently, a single person can receive £97.65 a week and a couple £156.15, with extra means-tested payments to the poorest pensioners leading to single person payouts of up to £132.50. Under the new regime a single person could receive £7,280 a year and a couple £14,560.
The Government believes it can save £6bn by cutting the bureaucracy around means-testing, according to reports.
Pensions minister Steve Webb (pictured) has long campaigned for a citizens’ pension.
A Department for Work and Pensions spokeswoman says: “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.”
The Saga Group director general Ros Altmann says; “After years of watching our pension system falling apart, it seems that the Coalition Government’s new Pensions Minister, Steve Webb, may finally be getting to grips with the inadequacies of the UK state pension.”
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Readers' comments (21)
Sean Kelly | 25 Oct 2010 8:39 am
Does this mean that those people who have built up benefits under SERPS/S2P are now subsidising low earners? All very socialist to me. How many people now wish they had contracted out?
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Ian A | 25 Oct 2010 9:00 am
I have no problem with Socialist policies and I have remained contracted out despite advice to the contrary.
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Nick | 25 Oct 2010 9:06 am
with reference to the first two posts - my first rule of investing is-
NEVER give money to the government unless legally required to do so!
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Kevin Archer | 25 Oct 2010 9:15 am
Great News (socialist in docrine or not). All we need now is more simplification to the private pension arrangements and the population at large will begin to understand them and then contribute voluntarily. From an adviser point of veiw the CII pension exam will be easy to pass although they will still make it 2hours duration and filled with questions, some even relating to pensions?
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JD | 25 Oct 2010 9:52 am
This pensions Idea is great. I have no objection to Lord Sugar being paid £250 winter fuel allowance if the cost of means-testing means that it costs more not to pay him! Can you image having any personal insurance policy you have paid into for years being means tested? I only object to the fact that I received the full amount initially, but when my wife reached 60 she was automatically paid half, without even consulting me! The most important thing is that the Government of the day stops p*****g about with our pensions.
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Steve | 25 Oct 2010 11:34 am
So, the ConDemers plan to raise the state pension from the current £97 to £140 a week for everyone by 2015. Sounds fantastic eh - another 40 quid a week ! Very good news for some married couples where the wife doesn't qualify for a full state pension in her own right of course but not as good as it looks for anyone who does qualifiy for a full state pension or anyone who already gets the full pension credit top-up (which will be abolished at the same time and which in any case makes the state pension up to about £132 a week at the moment). Why not ?
Because by 2015 the SP will probably have been indexed to around £120 a week anyway so in reality it's more like a £20 increase. Then you have to take 5 years RPI inflation off that 20 quid to relate it to today's prices which makes that £20 actually "worth" more like £15 a week by 2015. Most of us will pay 20% tax on our State Pensions so that makes it about £12 a week net. Also SERPS/ SSP is likely to be abolished. Smoke and mirrors
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john whipple | 25 Oct 2010 11:53 am
Very good Steve - but on the other side they are going to link the increase to AWE I think they now call it. So that could be fairer.
But for those that stayed out of SERPS and S2P well done!
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M J Winfield | 25 Oct 2010 11:54 am
Thank you Steve.
Perhaps you should apply for Ros Attmanns job? Her opinion suggests the government is open.
The mirror will always tell the truth
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Evan owen | 25 Oct 2010 11:56 am
Do these government officials talk to each other?
Muppets, the lot of them.
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M J Winfield | 25 Oct 2010 12:19 pm
In the interest of fairness the State Pension should be cancelled for all Members of Parliament, House of Lords, Senior Judges and anybody on a executyive Civil Service state funded employment pension.
Their reward from the State, means they do not need Winter Fuel Allowance or a State Pension.
The massive saving could be used to fund Overseas Development.
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