Many of the followers of this blog will be familiar with the patter used in adverts for debt consolidation loans. The popular advert theme usually runs along the lines of:

“Why have lots of different loans, when you can have one easy to manage payment?”

And this approach may have some commonality with the proposed new approach to UK State Pensions.

As has been mentioned more than once on this blog, plans to simplify the State pensions system have been mooted for some time. Yesterday a formal White Paper on the subject was finally issued.

The approach would appear to be to sweep away the various components of State Pensions, and replace these elements with one flat-rate benefit for all.

As with all change, there will be winners and losers. But the biggest winner in my view will be that savers will have a much better idea of what to expect from the State in retirement, and thus can make their own planning with a higher degree of certainty.

So this is probably a good thing, and we will keep you posted on progress. In the meantime I list the bullet-points from yesterday’s White Paper (which were helpfully provided to me by the Department of Work and Pensions (DWP) yesterday afternoon):

“The key elements of the single-tier pension are:

A simple, single state pension set above the basic level of means-tested support (the Pension Credit Standard Minimum Guarantee, currently £142.70)

For future pensioners, the basic State Pension, State Second Pension (and thus contracting out of the State Second Pension) will end, as will the Savings Credit and other complex or outdated elements of the current system.

Entitlement to the single-tier state pension will be based on individual qualification, rather than reliance on a partner’s National Insurance record.

A requirement for 35 years National Insurance contributions or credits for a new pensioner to get the full amount; there will also be a minimum qualifying period to receive any state pension, which we anticipate will be between 7 and 10 years.

Self-employed workers will have access to a higher state pension than under the current scheme, which excludes them from the state second pension.”

Best regards

Steve