Press release

Broad support for state pension reform – consultation response

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Broad support for state pension reforms that could significantly reduce the need for pensioners to apply for pension credit.

A summary of consultation responses being published today reveals broad support for state pension reforms that could significantly reduce the need for pensioners to apply for pension credit. Latest figures show that, without reform, two million pensioners will still be eligible for pension credit in 2050.

The consultation ‘A State Pension for the 21st century’ proposed two options for reforming the state pension for future pensioners. Over three-quarters of organisations who responded favoured the single tier option in principle. This option would raise the state pension to around £140 - above the level of the current means testing threshold and would significantly reduce the need for low income pensioners to apply for pension credit. Without reform millions would still need to apply for pension credit top ups for decades to come.

Minister for Pensions Steve Webb said:

In spite of our best efforts to encourage take-up, Pension Credit has failed to reach over a million low income pensioners who are entitled to help.  What we want to do is reform to create a simpler State Pension that won’t leave people relying on means testing to make ends meet.

A simple, decent state pension, that is easy to understand would give people more clarity and certainty about what they will get from the state. It is this clarity and firm foundation that will help people make decisions about saving for retirement - a crucial step as we prepare to enrol 10 million people into workplace savings from 2012.

Ministers will now consider the feedback from the consultation and bring forward more detailed proposals for state pension reform.

Notes to Editors:

The summary of responses available here: http://www.dwp.gov.uk/consultations/2011/state-pension-21st-century.shtml

The consultation sought views on the Government’s proposals for simplifying the state pension system. It included two options:

  • to speed up the transition to a two tier flat rate pension; or
  • to create a single tier flat rate pension above the Pension Credit standard minimum guarantee

It also consulted on the most appropriate mechanism for determining future changes to state pension age.

There were around 1600 responses from individuals and 102 from stakeholder groups, including:

  • representative organisations and business
  • employers with Defined Benefit pension schemes
  • pension administrators and trustees
  • voluntary sector organisations
  • members of the public