PENSIONERS in East Lancashire will be entitled to a simple flat-rate weekly state pension of £144 relevant to inflation from 2017.
David Cameron and his Coalition’s radical reforms are an attempt to simplify the current multi-tiered system by scrapping top-ups and ending the practice of “contracting out” the state second pension to employers.
The changes will benefit women who took time off work to care for families, low-earners, self-employed people and those who have worked intermittently.
However, throughout the United Kingdom around six million higher paid people will be expected to increase their National Insurance contributions by 1.4 per cent, but their state pension will not expand accordingly.
Jake Berry, the MP for Darwen and Rossendale, welcomed the move.
He said: “The single tier pension is the next major step in our reform to the welfare system.
“Not only are we making work pay with universal credit, but we will now ensure it pays to save. Under the existing system millions of savers are penalised for doing the right thing thanks to the way pension credit works.
“This reform is also good news for women who for too long have effectively been punished by the current system. The single tier pension will mean people have certainty in what they can expect from the state.”
Instead of the current a basic pension of £107 a week plus various means-tested top-ups, recipients will get £144 plus inflation rises over the next four years, from 2017 at the earliest.
Jack Straw, the Labour MP for Blackburn, said: “People are basically supporting the plans but being cautious because we don’t know how it’s going to operate.
“It’s too early to say whether it is going to work out.
“In principle, a single-tier pension scheme is the answer, but the details are far from clear and it’s too early to judge.
“The aim is always to simplify the pensions system but it doesn’t always work out that way.
“There are many hurdles between today’s announcement and the implementation of the proposals.”