Chancellor George Osborne has confirmed that proposals for a flat-rate state pension for future retirees will be brought forward “shortly”.
The Budget document says the Government will look to reform the state pension for future pensioners so that it provides “simple, contributory, flat-rate support above the level of the means-tested guaranteed credit”.
It says the DWP will publish a much anticipated green paper to consult on options for reform, one of which will be a single-tier payment worth around £140 per week.
This reform would end contracting-out for defined benefit pension schemes. The Government says it will honour contributions made into the current system, although details of how people who have contracted-out of the state second pension and Serps will be treated have yet to be revealed.
The document says: “The Government will investigate the potential impact on employees and schemes in both the private and public sectors. The Government will honour contributions to the current system.
“Given longer-term pressures on the public finances, these reforms will be designed so as not to increase public spending dedicated to state pensions.”