The government’s proposal for a new single-tier statement pension was included in the Queen’s Speech.
The single-tier state pension, announced in the Budget Report, will be set at around £140 a week.
During her speech the Queen said: “My government will bring forward measures to modernise the pension system and reform the state pension, creating a fair, simple and sustainable foundation for private saving.”
Malcolm McLean, a consultant, Barnett Waddingham, says: “It is good news that the concept of a new flat-rate state pension has moved another very significant step forward.
“There are some very clear advantages in such a system; a simpler and easier to understand pension for future pensioners as well as for many of today’s workers a platform on which to base private saving without the risk of overlap with means-tested benefits.
“There are also a number of points of detail which will bear further scrutiny when they emerge, including how accrued rights to the state second pension above the baseline of £140 will be treated, and what impact the ending of contracting out rebates from defined benefit schemes will have on national insurance contribution payments for employees and employers.”
It was also confirmed that the state pension age will rise to 67 between 2026 and 2028.
Legislation will also be introduced to reform public sector pensions in line with the recommendations of the Independent Public Service Pensions Commission.