Monday, 4 April 2011

Pension green paper with a magic formula

The government has laid out its plans to introduce a flat rate pension in the future, worth around £140 a week in today's money.

It's been suggested that the new flat-rate pension could be worth £155 a week if it comes in around 2015.

Now it's emerged that those with under 7 years of National Insurance contributions won't qualify, which will help keep down costs.

Also that it'll go up every year in the same way as the current state pension, by the highest of average earnings, inflation or 2.5% -- the so-called triple lock.

There's more detail about future increases in the state pension age, which is already set to rise to 66 in 2020 and to 68 later on.

Which brings us to the magic formula. The government is considering an automatic calculation which would push up pension age in line with increases in life expectancy.

The alternative would be to hold regular reviews at pre-set intervals to decide on increases.

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