The state pension system would "baffle even Einstein", says pensions minister

Two hundred pounds a week – that’s how much the amount of state pension money paid out to pensioners can differ by according to the Department of Work and Pensions. That’s a difference of £10,000 a year and the DWP believes it is because the level of basic and additional state pension payouts can vary so much in the current system.

State pension income varies from around £7 a week to £230 a week with about 130,000 people getting £7 or less a week and the same number of people getting £230 or more a week according to the latest DWP information.

The Department of Work and Pensions says state pension regulations have multiplied increasingly over recent decades. It states this has made the system so complicated that people are finding it too complicated to work out what they will get per week and may be unable to budget properly for their needs.

Pensions Minister Steve Webb said: “The range of state pension payouts at the moment is simply staggering. The current system is so complex and would baffle even Einstein. Worse, if people have no idea what they will get, they can’t make sure they have enough savings for their retirement.

“We can’t go on playing roulette with pensions. A flat-rate single-tier state pension will restore simplicity and give people certainty instead of chance. And it will provide a sure foundation for further saving.”

The current state pension is made up of the basic state pension and various additional state pension entitlements. It is to be replaced with a simple flat-rate state pension for new pensioners set above the level of the means test, currently estimated at around £140 a week.

A White Paper will set out further details later this year.