Page last updated at 17:02 GMT, Monday, 14 January 2013

Minister outlines flat-rate pension plans

Pensions Minister Steve Webb has outlined proposals for a new flat-rate pension to be introduced in 2017.

The weekly payment will be £144, plus inflation rises between now and 2017, and won't be "means tested".

Ministers say women, low earners and the self-employed will be better off under the proposals but critics claim the majority of people will receive reduced payments.

Mr Webb said the new scheme would be fairer and simpler, as he addressed MPs on 14 January 2013.

He said the system will reflect that "people are living longer, will be drawing their state pension at a later point in their life, and that working patterns and family life have changed".

Labour claimed more than 400,000 women on the verge of retirement will miss out on the new pension but men in the same position will still benefit.

"And let me dig a little deeper?" shadow minister Greg McClymont said to Mr Webb: "You referred to existing pensioners - is it the case that this proposal excludes all those existing pensioners and all those who intend to retire before 2017?

"If that is the case, what is your message to those 15 or 16 million pensioners in my calculation who will not be eligible for the new pension?" he asked.

The current full state pension is £107.45 a week, but can be topped up to £142.70 with pension credit, and by the state second pension.

Under the new proposals people will have to work longer, making 35 years worth of National Insurance (NI) contributions, rather than the current 30.

Anyone who has not paid NI for at least 10 years will not qualify for the enhanced state pension at all.

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