The Government, in its Green Paper, 'A state pension for the 21st Century', has set out its thoughts on how to simplify the system for future pensioners. It includes a single-tier state pension currently estimated at around £140 a week, set above the current guarantee element of Pension Credit. This would replace the existing combination of entitlements that make up the present state pension.
State pension reform would underpin existing plans to automatically enrol people into workplace pensions from 2012, bringing between 5-8 million into saving for the first time.
The Government has said that a state pension for future pensioners would not involve increases in public spending dedicated to state pensions. Any contributions accrued by people under the current pension system would be honoured.
The Pensions Bill currently going through Parliament is taking forward, among other things, changes recommended by an independent review of automatic enrolment, to ensure that there is a balance between costs and benefits for individuals and a more proportionate impact on employers.
This was first published in May 2011