DWP issues statement on simplifying the state pension

The Department for Work and Pensions (DWP) has issued a statement on the proposed simplification of the state pension.

As confirmed in the 2012 Budget in March, the government will introduce a flat-rate, single-tier state pension, currently estimated at around £140 a week.

It will replace the current state pension, which is made up of the basic state pension and various additional state pension entitlements.

According to the latest DWP administrative data, the level of basic and additional state pension payouts can vary so much in the current system, from around £7 a week to £230 a week. Around 130,000 people get £7 or less a week and the same number of people receive £230 or more a week.

Steve Webb, pensions minister, said: “The range of state pension payouts at the moment is simply staggering.

“The current system is so complex and would baffle even Einstein. Worse, if people have no idea what they will get, they can’t make sure they have enough savings for their retirement.

“We can’t go on playing roulette with pensions. A flat-rate, single-tier state pension will restore simplicity and give people certainty instead of chance. And it will provide a sure foundation for further saving.”

A white paper will set out further details later this year.

Read more articles on the changes to the state pension