Reforms to the state pension will particularly benefit women who take time out to bring up a family and low earners, according to figures published by the Department for Work and Pensions (DWP).
Its Impact assessment on the single tier, published 18 January, also showed that more than half of over-25s will receive more state pension income during retirement than they would do under the current system.
In the 2020s, three-quarters of all new retirees will receive a higher state pension, and two-thirds will be better off in the 2040s.
The government announced plans to introduce a new flat-rate state pension on 14 January. The new pension, which is planned for April 2017 at the earliest, will be worth around £144 a week.
The government’s report also found that, without the reforms, spending on state pensions and pensioner benefits would rise from 6.9% of GDP in 2012/13 to 8.5% in 2060/61. The reforms mean the increase will slow to reach 8.1% in 2060, ensuring the state pension remains sustainable for future generations.
The DWP figures showed that by 2060 the poorest pensioners stand to benefit the most. Over 60% of those getting the least in retirement will gain under the reforms.
The draft Pensions Bill will include proposals for:
- A minimum qualifying period to qualify for a pension, meaning it will not be possible for someone to come from abroad, work for a handful of years and receive a payment from the British government for the rest of their lives. The minimum qualifying rule will mean that by 2040 almost 400,000 people living overseas (outside the European Economic Area (EEA)) will not qualify as a result of the reforms.
- A framework for regular, independently-led reviews of state pension age.
- The simplification of the current complex system of bereavement benefits through the introduction of the Bereavement Support Payment.
- Measures to strengthen existing private pensions legislation.
Steve Webb, minister for pensions, said: “We’re doing the right thing by today’s workforce with our reforms. The majority of over-25s will get more, not less, income during their retirement under single tier.
“We’re also doing the right thing by younger people, giving them a simple, clear state pension, and the right to a workplace pension on top, with a contribution from their employer and the government.”