A fairer and simpler foundation for saving

May 15, 2014 7:30 AM
Originally published by UK Liberal Democrats

Major reforms to the state pensions are a step closer today after the legislation became law. Liberal Democrats in Government have been working towards these reforms which will simplify the system and provide greater clarity about what retirees will receive.

The new single tier state pension will replace the complex mix of basic and additional state pension. This will create a simple flat rate pension, set above the basic means test, that will give people more confidence to save for retirement.

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82% of those who receive the lowest amounts under the current system in Britain are women. It is expected that more than 650,000 women will benefit from the single-tier valuation of their pension in the first 10 years of implementation. Millions of self-employed people will also be able to secure a more comfortable retirement as they will be included in the state pension system for the first time.

The vast majority of people will either see no change in outcome compared to what they would have received had the current system continued or they will have a better outcome under single tier.

The Liberal Democrats also introduced the triple lock guarantee, which ensures that the state pension rises with inflation, earnings or 2.5% - whichever is highest. This has increased the state pension by £650 compared to under Labour