Pensions minister Steve Webb has defended government plans for a flat-rate state pension of £140 per week, saying it is fairer and would not cost more than the current pensions system.
Speaking at a Liberal Democrat conference meeting Webb shed more light on how a universal, non-means-tested state pension would be funded, and whether existing entitlements would be honoured.
He said the reforms would not cost more than what had already been budgeted by the previous government.
‘We will take the state pension budget for 2016 and looked at how we can spend it better,’ said Webb.
‘A retiring male can typically expect a pension of £160 at retirement. A female can expect £130 state pension. You might say its not fair but that is a fact of the state pension system now…We are not giving a boost to new pensions, we are taking the existing benefit and making it fairer.’
Webb said those about to retire when the reforms come in could expect to receive the same state pension as they would have otherwise done. However, those further away from retirement would see their expected entitlements change by the time the retired.
He said: ‘You will still get your £160 a week if that what you are about to get now. In the future high earners will not be entitled to any more than £140. But on day one there will not be that many [whose entitlement is lowered ] because we have to honour the past, so we have done little things to fix that, for example if you have only spent a few months in the country you don’t get anything.’
Webb told Lib Dems his policy would ‘take money from high earners to spend on carers and women’.
He also stressed the importance of removing means-testing to ensure the success of auto-enrolment.