Pensions minister James Purnell is floating the idea of merging the two components of the state pension into a single rebranded pension to help with simplicity and public understanding.Although he has not given further details, Purnell said this does not mean the Government is considering creating a single-tier pension. Speaking at a Parliamentary SMF event in London, he gave details on the simplification of S2P, indicating how the Government could replace complex S2P calculations with a fixed sum received dependent on the amount of time spent working or caring. He said the fixed figure, which could be in the region of £1.40 a week for each qualifying year, would be implemented when the basic state pension is relinked to earnings, although there would still be a residual earnings-related element withdrawn gradually until 2030. Purnell would not comment on reports that personal accounts may combine a hybrid approach with a low-charge default fund and a wider choice of providers with higher charges. He said December’s White Paper will establish an independent Delivery Authority to help design the operational structure of personal accounts and manage the contracting processes for the scheme. Purnell said: “I would like to hear your views on whether, if we are to proceed with this approach, we should formally merge the two parts of the state pension into a single, rebranded pension, or whether people would prefer us to retain the term state second pension.”
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