The U.K. government proposed replacing its current means-tested state pension with a flat-rate payment of about 140 pounds ($225) a week, with the goal of increasing incentives for people to save for their old age.
The U.K. government proposed replacing its current means-tested state pension with a flat-rate payment of about 140 pounds ($225) a week, with the goal of increasing incentives for people to save for their old age.
Pensions Minister Steve Webb, setting out the plans in the House of Commons in London today, said more Britons need to save more money for their retirement. The government argues that the current system, in which pensions are cut if people have savings, discourages people from putting money aside for when they no longer work.
“The current state pension system is dogged by complexity and confusion, it makes it very difficult to save for retirement and leaves millions of people relying on complicated means- tested support,” Webb said in an e-mailed statement. “These reforms will transform pension saving in this country for millions of people.”
Webb said simplification would mean the new system needn't cost more money. He also asked for opinions on different options for raising the state pension age. The government has already said men and women will not be able to draw their state pension until age 66 by 2020 and is now looking at how changes should be made in future.
U.K. state pensions were set up in 1908, when the average life expectancy was 41. According to the government, in 1981 an average 65-year-old man could expect to live for another 14 years. His life expectancy at 65 is now more than 21 years, and by 2050 it will be more than 25 years.
In another move, the Department for Work and Pensions set out plans to reduce the 12 billion-pound bill for disability benefits by assessing the 3.2 million people who claim it to see what work they're able to do.
--Bloomberg News--
