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.”