Government to unveil overhaul of pensions system

| March 8, 2011 | 0 Comments
Government to unveil overhaul of pensions system

Work and Pensions Secretary, Iain Duncan Smith, will unveil plans to simplify the pensions system so that it “pays to save” for retirement.

According to Mr Duncan Smith, it should make pension planning easier to understand – stripping out the current complex means-tested payments system and will move towards a flat-rate payment for men and women.

He is expected to say: “We have to fundamentally simplify the system. And we have to make it crystal clear to young savers that it pays to save.”

There is speculation the basic state pension will see the introduction of one universal payment - around £140 a week, however, this has yet to be confirmed.

This compares with the current basic state pension of £97.65 for a single person and £156.15 for a couple.

Mr Duncan Smith will also say the new system will ensure mothers who currently lose out on their pensions for having taken time off to raise their children do not lose out later in life because of a lack of National Insurance contributions.

In related news, the Government recently confirmed that the UK state pension age (SPA) will increase to 66 from 65 by 2020.

The measures were first announced in the Government’s Spending Review last year and followed a proposal already outlined by the former Labour Government.

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