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14 Jan 2013

UK Government To Introduce Flat-Rate State Pension In 2017

The UK government is gearing up for the introduction of a flat rate state pension starting from 2017 in a move described by experts as a means to ensure a “simple, clear and understandable” scheme for pensioners going forward, the Financial Times reported.

Under the mechanism, which is expected to be announced by the government today, future pensioners will receive about £144 on a weekly basis. The new flat-rate pension is set to substitute basic state pension and all extra state pension payments.

One of the consequences of the planned changes will be the rise in the state pension age to 66 in 2020 and 67 by 2028, with further increases considered thereafter. This is in line with the government´s aim to bring the age at which Brtions qualify for pension in line with the growing life expectancy rate.

The new system will most likely benefit women, self-employed people and pensioners who receive lower incomes but have made savings for their retirement, Ros Altmann, director general of Safa Group, a company focused on serving the needs of people aged 50 and over, told the Financial Times. Current pensioners, however, will not be that pleased by the change. Nevertheless, the overhaul of the state pension system will ensure that people who work and save are properly recompensed. It will also shed light on the future payment mechanism for people due to retire and make saving safe and affordable, Altmann said.

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