New flat-rate state pension announced

Couple on beach

A new flat-rate pension is expected to come into place from April 2017.

The new, single-tier pension would be £144 per week, with anyone who had paid a minimum of 35 years of national insurance contributions to be eligible to receive the benefit. It is expected that it would rise each year in line with prices, earnings or 2.5%, whichever is higher.

Pensions minister Steve Webb said today he wanted the government to provide a "single, simple, decent state pension".

The Pensions Policy Institute today welcomed the announcement by Webb, saying the current pension system was too complex. At the moment individuals can qualify for a basic state pension of £107.45 per week and may be eligible for top-up payments, which could take the weekly income to £142.70 or £160.

The flat-rate pension will be paid to new pensioners reaching state pension age from 6 April 2017.

Keep it simple

Head of retirement planning at AXA, Andy Zanelli, says the new flat rate should be "seen as a fantastic benefit to many" and hoped it would send a much needed message to the public that "pensions should be simple to understand and something they should be actively engaged with".

Tom McPhail, head of pensions research at Hargreaves Lansdown, agrees that the reform was "vital" and says it "lays the foundation to rebuild the UK's retirement savings". He adds: "It will simplify the state pension for millions of today's workers, allowing them to plan their retirement with more certainty."

To receive the same annuity income of £144 (£7,488 a year), McPhail points out a 65-year-old would need a pension pot of more than £200,000.

This article was written for our sister website Money Observer

Your Comments

Is it true that people already in receipt of Pension payments will not receive the higher Pension?
Much was made on the News of a unified Pension taking in the 'Standard' Pension plus various Pension additions. But many current Pensioners, for one reason or another, don't qualify for the Supplements.

The flat-rate pension will be paid to new pensioners reaching state pension age from 6 April 2017.
And what of those of us who reached pensionable age before 6 April 2017 who have contributed 35 years or more of National insurance contributions? 48 YEARS IN MY CASE!
Are we to be paid less because we were born too soon? Even though  we will probably have paid a great deal more in National Insurance contributions than those who newly qualify from that date onwards?
Are we to be treated as second class citizens?
What about the pensioners born before that date that have fought for their country? Are they to be paid less than the hundreds of thousands of immigrants who have contributed very little if anything but are getting all sorts of benefits that they haven't paid for? Sending money back to their children in Poland etc even though they never have and in many cases never will set foot on this land? 
It's about time we stood up for ourselves, I for one am prepared to join in demonstrations, rallies, protests against such a policy if it is implemented.
John A Deakin (Rhyl, North Wales)

Quite right, Mr Deakin, yiou and I are both second rate citizens who will not receive the new pension. I have been campaigning for some time already oer the swtioch from RPI to CPI and can assure you that the sad fact is that the switch is purely to save money.
We can afford to fight other peoples wars, give billions away in foreign aid but we cannot afford to look after our own. Time to man the barricades, I fear.

I wonder if the govenment will be true to their word to keep it simple to all the pensioners in Australia and Canada  and pay a flat rate pension  to all those pensioners who have in my view illegaly had their pensions frozen for many years ...Lets see if the rules are bent again to suit their own needs ! Lets see if Steve Webb does what he promises !

I was advised and actually topped up my NI contibutions to get the maximum and also delayed taking my pension for 2 years. It still would not reach the new basic minimum of £144 (equivalent) in todays money.
That was a daft thing to do wasnt it ?

I am a male who reaches 65 on 1 May 2017. I have received a Pension Forecast of £162.00 per week, so under the new arrangements I will be approx £20.00 per week worse off.

I am a 57 year old woman.  I wanted to receive my pension at 60 as I've worked from age 15.  I now have to work until at least 66 to get a state pension.  I am not amused!