Flat Rate Pension Law On The Way

Steve Webb, the Pensions Minister, has announced plans to create laws that will even out the differences between state pension payouts that currently differ by more than £200 a week.

London, UK (Pryce Warner International Group) August 31st, 2012 -  Describing the current inequalities as "unfair" Mr Webb offered hope for UK citizens, but could not extend that same hope for Expats.  Hundreds of thousands of Expats currently receive state pensions that are not index-linked, and this is set to stay the same.

At present, the state pension system consists of the basic state pension plus additional payments that are means tested.  This is now due to be scrapped and be replaced by a flat-rate system for all pensioners.

Mr Webb commented: “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."

It is estimated that this new flat-rate will be £140/week and index linked, meaning the number will increase in line with the cost of living.  State pensions currently vary from £7-£230 per week.

It is often Expats who suffer the £7 per week pension, and have long faught against it.  Expats  living in the European Union and some other countries are paid index-linked pensions, while those living elsewhere have their pensions pegged at the rate paid on the date they retire.

A recent campaign run by the International Consortium of British Pensioners made it all the way to the European Courts of Justice, but ultimately lost.

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By Aneil Fatania
Financial Editor
Pryce Warner International Group
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