25 October 2010

One Size Fits All-New Pension Scheme

In what is set to be one of the biggest changes in the cut-back process, the government has decided to stop varying pensions and to install a ‘one size fits all’ alternative that will entirely disregard individual personal financial situations or circumstance.

The change is being made in order to simplify the pensions scheme which was been in action for the last 50 years. What will happen is that all pension payments will be reduced (or increased) to £140 a week so everyone in Britain is receiving the same amount.

The new plans are likely to be announced as the year draws to a close in a Green Paper. One of the benefits of the new scheme will be that people will no longer be ‘means tested’ which is thought to be quite a humiliating process.

Another benefit is that couples whose pension was divided between them in the present scheme (at a basic state rate of £156.15) will now be inflated as each of them receive £140 a week. This would mean that couples could have an annual state income of £14,560 in the new plans.

As well as benefits for couples, the system will benefit single pensioners who receive the basic state pension as they will see their weekly income rise from £132.60 to the new £140 level.

The dominant feature in the change is to account for a number of loop holes in the pension system which often affected women who could not qualify for a full state pension because they had taken time out to raise their children.

Ministers aim to introduce the new pension in Parliament by the end of 2015, wanting it to be firmly installed before the retirement age plans are put in action (which will see the pension age for women rise to 66).

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