Belfast Telegraph

Tuesday 22 July 2014

Single flat rate pension planned

It is not clear how many will lose out overall as they are likely to receive a higher state pension than before

Details of a radical shake-up of the state pension are due to be unveiled by the coalition on Monday.

A single flat rate, equivalent to around £144 in today's money, is set to be introduced for new pensioners from 2017 in a bid to simplify the system.

Some six million workers will face higher national insurance payments in future as the practice of "contracting out" the state second pension to employers is ended.

Those affected are expected to include more than a million private sector staff enrolled in final salary schemes, and an estimated five million public sector workers.

However, it is not clear how many will lose out overall as they are likely to receive a higher state pension than before. Funds and firms could also alter their schemes and contribution levels to take account of the shift. Some groups - such as women who have taken career breaks to have children and the self-employed - will be clear winners.

The Department for Work and Pensions confirmed that the White Paper is being published on Monday. Iain Duncan Smith and his Liberal Democrat deputy at the department, Steve Webb, are believed to have overcome Treasury concerns to get final sign-off for the policy.

Malcolm McLean, a consultant with pensions experts Barnett Waddingham, said: "The concept of a single, simpler-to-understand state pension pitched at a level that lifts as many people as possible off means testing and encourages them to save privately to give themselves a better standard of living in their later years is very desirable if not essential in a society such as ours with an ageing population."

Shadow pensions minister Gregg McClymont said the coalition had originally suggested the reforms would be introduced in 2016.

"The chaos surrounding the Government's relaunch gets worse and worse. These pensions proposals are just half a plan yet they are still delayed by a year," he said. "With the granny tax, this Government has already established a track record of incompetence and secrecy so we will look at the detail, but the Government should come clean immediately and set out exactly who the losers are.

"Sensible pensions reform should give people confidence to save but the Government has failed to ensure that private pensions will deliver value for money, and what they are announcing next week is only a half-reform. Only Labour have set out plans for reform to create pensions people can trust."