Articles - A Single Tier State Pension

 Details of the Coalition Government's plans to simplify the state pension system with the creation of the "Single Tier" pension, have been published in a White Paper as part of the Mid-Term Review. The Executive summary can be found HERE and the full White Paper can be found HERE.

 The reform will create a simple flat rate pension set above the means test (currently £142.70) and based on 35 years of National Insurance contributions. It will particularly benefit women, low earners and the self employed, who under existing rules find it difficult to earn a full state pension.

 By replacing today's complex system of add-ons and means-testing the Single Tier will provide certainty to people about what they will get from the state and provide a better platform for them to save for their retirement.

 Secretary of State for Work and Pensions, Iain Duncan Smith said:

 "This reform is good news for women who for too long have been effectively punished by the current system. The Single Tier will mean that more women can get a full state pension in their own right, and stop this shameful situation where they are let down by the system when it comes to retirement because they have taken time out to care for their family."

 Minister for Pensions Steve Webb said:

 "The current state pension system is too complicated and leaves millions of people needing means-tested top-ups. We can do better. Our simple, single tier pension will provide a decent, solid foundation for new pensioners in an otherwise less certain world, ensuring it pays to save."

 Joanne Segars, Chief Executive, National Association of Pension Funds:

 "Today's announcement for a simpler, more generous state pension is a much-needed shake-up that will ultimately help millions of pensioners and savers. For the first time in a generation, people will know that it pays to save, and that whatever they put aside won't be eroded by means-testing when they retire."

 Dr Ros Altmann, Pensions expert:

 "Such radical state pension reform is long overdue and it will be a huge step forward to have a single, flat-rate state pension, without mass means-testing in future. This will make it safer to save, which is essential as auto-enrolment extends across the workforce."

 Tom McPhail, Head of Pensions Research, Hargreaves Lansdown:

 "For anyone who doubts the importance of joining a pension, the message is now very simple: if you want to more than £7,500 a year to live on in retirement, you need to start saving. With millions of employees set to join their company pension in the months ahead, today's announcement delivers the foundation for a solution to the pensions crisis."

 Otto Thoresen, Director General, ABI, comments:

 "A simple approach to state pension provision is a key element in ensuring the success of pension reform. With greater clarity about what the State will provide, and automatic enrolment to encourage people to make additional provision for their retirement through the workplace there is a real chance to create a savings culture in the UK. We welcome today's proposals to take forward this legislation."

 Key facts

 Key benefits of the reforms:

 Key features of the Single Tier pension: