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Government plans £140-a-week pension revolution

The government is planning to introduce a £140-a-week state pension that will abolish the controversial practice of means testing people's savings.

 
Government plans £140-a-week pension revolution

The government is planning to introduce a £140-a-week state pension that will abolish the controversial practice of means testing people's savings.

The Department of Work and Pensions has confirmed Citywire's report on Friday which revealed that pensions minister Steve Webb was planning radical reform of the state pension and a roll-back of means testing.

A spokesman for the DWP said: ‘The chancellor has confirmed that the government will improve the quality and accessibility of pensions in the spending review period. We will be bringing forward proposals for reform 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 new flat rate £140 will replace the current system which pays out £97.65 a week and £156.15 for a couple on the basic state pension (BSP) plus a means-tested top up. However, many people with moderate private savings lose this extra entitlement, making them wonder why they bothered to save.

The new‘single tier’ pension will provide an income of £7,280 per year for a single person and £14,560 for a couple.

The proposals will be outlined in a green paper before the end of this year and are due to be implemented by the end of the current parliament in 2015.

This means the new entitlement will come in before the increases in state pension age announced last week – 66 for men and women by 2020 starting for men in 2018. Qualification would be based on the number of years lived in Britain as a citizen or resident.

Ros Altmann, pension expert and director general of Saga group, welcomed the news. '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. If today's reports are accurate, and they do seem mightily well-informed, a pension revolution is about to occur.'

24 comments so far. Why not have your say?

DEAD RINGER

Oct 25, 2010 at 10:03

What a load of bullshit, there never was a choice under the eu they are being forced to compile and that's it. full stop. the only concession they had was to leave it until they are into the next parliament .. they have dragged it out as far has it is humanly possible.

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Bill Steele

Oct 25, 2010 at 10:17

DEAD RINGER . . . . . . .

I agree with you entirely, but I think you meant COMPLY not COMPILE!

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alangb

Oct 25, 2010 at 10:18

Dead Ringer, You may be correct but it is still a move in the right direction and is to be welcomed. I don't care if it is rhanks to the EU.

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boulderdash

Oct 25, 2010 at 10:47

I thought to qualify for a full state pension you had to have worked and paid your National Insurance Contributions for either F/40 or M/44 years,Since when did it change then that just living here for a number years as a Citizen or being just a resident Qualify you for a Full Pension.

I thought you had to pay in to get something out!!!, silly me.

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Eric

Oct 25, 2010 at 10:48

Not sure what will happen to my SERPS contributions under this scheme. If they are to be forgotten I could actually be a loser here.

Anyone know?

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roy gibbons

Oct 25, 2010 at 10:55

Why the End Of 2015 delay! why not 2011 or 12 or even 13. Not sure I will survive till then with the cost of food rising so fast and the weather getting colder earlier.

It does not take minister that long to give themselves an increase. And look at their outcry when their subsidised beverages were put up even though they are still cheaper than we pensioners can buy.

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michael Bartlett

Oct 25, 2010 at 11:27

Agreed Roy Gibbons

Me too ......but I'll try really hard to survive long enough to enjoy what the New Zealand Pensioners have enjoyed for many years.

Some years ago, when the old lot were in power, I suggested that State Pensions increases might be link to the Mimmum wage increases but the reply was that there were no plans to do this!

Perhaps we need now to watch carefully as the 'Perks' (Bus passes, Winter fuel allowance etc) may vanish or included in the new State Pensions.

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Hmmmmm

Oct 25, 2010 at 11:32

sounds like I should have contracted out (for longer than I did) of SERPS!

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DEAD RINGER

Oct 25, 2010 at 11:39

My dear fellow get real, we are in the eu. working and saving like a true British citizen is old hat. If you can get through the tunnel your in mate. No one questions you in case you play your face and shout raciest at them. then they get suspended and they cannot pay their mortgage or feed their kids so better shut your mouth and pay the fuc**** and sleep easy. you have been con as usual

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Tony.G.

Oct 25, 2010 at 11:40

Its always the same,we have to wait till 2015 but they get any rise now.If they raise taxes they start as soon as pos.but if they have togive somthing back it starts a lot later.

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StanInCyprus

Oct 25, 2010 at 11:42

The article states "Qualification would be based on the number of years lived in Britain as a citizen or resident".

What happens to a 'UK citizen' who has paid all the required contributions to qualify for a FULL State Pension under current regulations BUT through working or retiring abroad, or both, has had limited years of actual 'UK residence'?

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DEAD RINGER

Oct 25, 2010 at 11:48

I dow live no moor in ingland i live in Thailand cos om old and the birds here will have ya as lung as yav got a few bob, so william i did have the privilge of guuing to a very posh scool when i was a kid, leaering was on optional extra, if yo catch me drifft . but as i did mek a fortune out of the black country i day ever work out them big words like comply, but ya was right mate i was rung..

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Loadsawad

Oct 25, 2010 at 12:43

So, the ConDemers plan to raise the state pension from the current £97 to (allegedly) £140 a week for everyone by 2015. Sounds fantastic eh - another 40 quid a week ! Very good news for some married couples where the wife doesn't qualify for a full state pension in her own right of course but not as good as it looks for anyone who does qualify for a full state pension or anyone who already gets the full pension credit top-up (which will be abolished at the same time and which in any case makes the state pension up to about £132 a week at the moment). Why not ?

Because by 2015 the SP will probably have been indexed to around £120 a week anyway so in reality it's more like a £20 increase. Then you have to take 5 years RPI inflation off that 20 quid to relate it to today's prices which makes that £20 actually "worth" more like £15 a week by 2015. Most of us will pay 20% tax on our SPs so that makes it about £12 a week net. Quite a few of us, myself included, will actually be paying THIRTY percent income tax on it - assuming the current personal allowance clawback system is still in place for over 65s with gross taxable incomes over about £23K so that makes it more like £11 a week more net state pension in real terms. Not so generous after all eh ! Also SERPS/ SSP is likely to be abolished. Smoke and mirrors .

Hmm .. if state pension qualification becomes independent of your number of National Insurance contribution years then why have the NI system at all ? Beware ofg Greeks bearing gifts because I foresee the abolition of NI and a corrsponding hike in income tax which might well affect pensioners - who of course don't pay NI at the moment !

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Douglas

Oct 25, 2010 at 13:38

This will, I suspect include the winter fuel allowances, and serps, which means many of us will be worse off. It will however allow state pensions to be paid to those that have lived here only a few years, and paid no contributions, that is why the EU have directed this government to comply, not for the benefit of British people.

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Brian

Oct 25, 2010 at 13:42

Good Point regarding SERPS.

Can Citywire obtain more information please because it will affect a lot of people and there could be a lot of losers.

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DEAD RINGER

Oct 25, 2010 at 14:28

how ever it affects you, citywire and if god were their helper it will not change one tiny bit what you are about recieve.. just except you have been shafted and go and enjoy a pint and a joke in the pub. When will you ever see the truth.. they do no care one fly fuc; about you or me. The difference is i know it and you don't.

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Brian

Oct 25, 2010 at 14:43

Ah well, shafted again…nothing new there.

Still interested to hear the SERPS response…. just so I can prepare myself.

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Tiberious

Oct 25, 2010 at 18:35

Married in our early 20,s.Wife left work when the first of our two children born no financial assistance for first born.Also looked after her very ill father without any government aid. Returning to low paid work, essential if we were to stay solvent,advised to pay only married womans NI (small stamp).

At age 60 had to pay 2 NIs years to claim minimum pension some£ 30 p.w. Now that I am pension age her pension £57 apprx.

We know many people who get much more this and have contributed far less.The benifit culture we now have favours those that have contributed less,for what ever reason.Therefore,I am heartened,that her and other women in similar circumstances will be treated more fairly with a flat rate pension of £140

Is likely to happen? No.Not because the country can not afford it just look at cash involed in the benefits system and the bank bailouts.It wont happen because its fair .Being fair as never been done before.What ever next-a pension you can actually live on.

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snoekie

Oct 25, 2010 at 21:40

Better that the benefits culture be changed so that work is rewarded. No work, minimum benefits, by vouchers, not money and then time limited, and them that fall pregnant get no housing, live with their parents, their fault for lack of teaching the right thing, so they should suffer as well.

'Imported' benefitters get vouchers, and nothing for extra children. Let them find (and encouraged to keep) providers. for them and theirs. Harsh, yes, but we cannot afford to maintain the 'destitute' (actually many pay a lot to get here) of the world.

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Kristine S-O

Oct 25, 2010 at 23:36

So we have to suffer until 2015 with one of the worst state pension payouts in Europe. And will this £140 only be for new pension claimants I wonder?

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Lyndy H

Oct 26, 2010 at 16:36

It would make sense to contract out of Serps next tax year! No point in letting them keep any more of your money, as it won't make a jot of difference - open house for all, especially for those who have put nothing in to the system! I should not of contracted back in for the last 3 years - should have kept investing the money.

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Tiberious

Oct 26, 2010 at 18:00

60years ago state pensioners were poorly paid.Today the basic state penion is still very poor.To obtain more money you have to plead and show poverty the very thing that the Social Security System was meant to do away with.

Therefore, as its taken 60 years to progress nowhere then in all probability it will take another 6 decades for somethings to really alter.

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Boyan

Oct 27, 2010 at 10:26

By Golly, what a sorry lot of whingers you are....moan, moan, moan....me, me, me! Yes, it will not be necessary to have worked in an EU country in order to qualify for a state handout in old age - works the same for them foreign bastards as for you too; so, if you fancy, go man the barricades in jolly France and come age 62, you can get their State Pension...and nevermind SERPS, it's a separate arrangement...you'll get it at 66...or whatever!

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fil for pmmoney

Jan 02, 2011 at 21:34

as long as the coalition go on wasting millions our pensions will suffer and when they go as they surely will the other lot will waste billions i long for somebody to arrive to give the people who have paid their way all their life what they deserve and stop giving OUR money to the rest of europe there needs to be massive changes in our country and the stupid laws need reforming otherwise we will become a third world country in no time its time for the revolution by the people of england who have made it what it is stop the s--t from exploiting us lets start now we could be the strongest nation on earth but we kept down by idiots smash them NOW.

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