The single-tier pension is a fairer way of ensuring people will get a decent pension in their old age. It will treat men and women equally for the first time and will value unpaid caring work just as much as a high-flying city job. That is why the big winners will be women, carers and some low earners who haven’t previously received much in the way of earnings-related state pension.
This new ‘single-tier’ pension has much in common with the long-cherished Liberal Democrat goal of a Citizen’s Pension. The basic idea is that someone starting work under the new rules will build up just one state pension. We are ending the fiendishly complex system of two state pensions and tax credits that Labour presided over.
Our reforms go back to William Beveridge’s original idea of the modern state pension. Beveridge had envisaged a single, simple, decent state pension, paid after a lifetime of National Insurance Contributions. It will be set above the level of the basic means-test (currently £142.70 per week) and the full rate will be payable for those who have made 35 years of National Insurance Contributions.
Successive governments tinkered with the state pension. That meant that we have had, up till now, a system that the Pensions Commission itself described as one of the most complex in the world. Worse still, the current system actually discourages some people from putting anything aside.
The plans I unveiled today show that it doesn’t have to be like that anymore.
Yet another example of Liberal Democrats in the Coalition Government delivering a truly radical reform, and one that we can be proud of.
Rt Hon Professor Steve Webb MP
Liberal Democrat Minister for Pensions
have your say