Pension plans to be addressed by the government

A new flat-rate pension scheme is expected to begin in 2017, with the government making an announcement on pensions on Monday

16:47 14 January 2013

The government is due to make its announcement on pension plans on Monday, where it is expected there will be plans for a flat-rate pension to start in April 2017. This comes as a bid to simplify the pension system as Prime Minister David Cameron has said the current system is too complex.

 

If the basic state pension is to be combined with the state second pension the result will be a flat-rate plan.

 

The new plans are expected to affect individuals who want to receive a state pension from April 2017, and those who already expect a second state pension will be entitled to it.

 

It is believed that the announcement will bring plans for the largest change to the pension system in decades.

 

The amount will be £144 per week, whereas today’s full state pension is £107.45 per week. This can be made up to £142.70 however, by the likes of the second state pension.

 

Steve Webb, the Pensions Minister, told the BBC that a new system would be simpler. He said: “So we are proposing a simple system, not a more expensive one... that will help people plan for their retirements.”

 

It is understood that the groups who could benefit from any changes will be the self-employed, low earners and women. Some sources think that those people who have saved money for their retirement will be in the same situation as those who receive means-tested funds.

 

As reported by The Telegraph, one union member views the flat-rate pension as being fairer although warns that there could be some ‘serious consequence’ from the plans.

 

The Coalition are expected to touch on the issue surrounding National Insurance; supposedly those people who have not paid this for ten years may not be able to receive the edited state pension, according to reports.