Plans to simplify the state pension system with the creation of the ‘Single Tier’ pension have been announced today.
The reform will create a simple flat-rate pension set above the means test (currently £142.70) and based on 35 years of National Insurance contributions.
The new system will ensure for the first time that women are fully recognised for any years spent at home raising a family. The introduction of the Single Tier will also benefit low-earners and the self-employed.
The new single tier pension will replace Labour’s complex state pension system of add-ons and means-testing. Instead, the Single Tier will provide certainty to people about what they will get from the state and provide a better platform for them to save for their retirement.
Secretary of State for Work and Pensions, Iain Duncan Smith said:
“This reform is good news for women who for too long have been effectively punished by the current system. The Single Tier will mean that more women can get a full state pension in their own right, and stop this shameful situation where they are let down by the system when it comes to retirement because they have taken time out to care for their family.”