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A state pension for the 21st century – public consultation - closes 24th June 2011

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kevin's picture
Joined: 09/03/2009

This consultation seeks views on the Government’s proposals for simplifying the State Pension system. It includes two options:

  • to speed up the transition to a two tier flat rate pension; or
  • to create a single tier flat rate pension above the Pension Credit standard minimum guarantee.

We also want to consult on the most appropriate mechanism for determining future changes to State Pension age.


The short address for this page is<

Who this consultation is aimed at

We would like to hear from everyone who is interested in the simplification of the State Pension. We particularly welcome contributions from:

  • representative organisations and business
  • employers with Defined Benefit pension schemes
  • pension administrators and trustees
  • members of the public.

The consultation

PDF version

Rich text format

Copies of the consultation

If you would like to receive the consultation document in another format, for example in large print, please contact us using the details below.

Order copies of the consultation from The Stationery Office (<).

How to respond to this consultation

Start date 4 April 2011

End date 24 June 2011

You can respond by post or email as follows:

State Pension Reform Consultation Team
Pensions Analysis and Incomes Division
Department for Work and Pensions
5th Floor
Caxton House
Tothill Street




Please ensure your response reaches us by 24 June 2011<

kevin's picture
Joined: 09/03/2009

Plans that will see the biggest shake up of the state pension system for generations were unveiled today by the Pensions Minister, Steve Webb.

In the Green Paper ‘A state pension for the 21st Century’ options are set out on how to simplify the system for future pensioners. It includes a single-tier state pension currently estimated at around £140 a week, set above the current guarantee element of Pension Credit. This would replace the existing combination of entitlements that make up the present state pension.

This radical redesign, still based around the contributory principle, would over time lift millions out of means testing and also put an end to inequalities in the current system that penalises women, low earners and the self-employed.

Secretary of State for Work and Pensions, Iain Duncan Smith said:

“Over the years small changes to the state pension system have turned what started as a relatively simple contributory system into a complex mess, leaving people utterly confused as to what the state pension means for them.

"We have to send out a clear message across both the welfare and pension system: you will be better off in work than on benefits and you will be better off in retirement if you save."

Minister for Pensions, Steve Webb said:

“The current state pension system is dogged by complexity and confusion, it makes it very difficult to save for retirement and leaves millions of people relying on complicated means tested support.

“I’m proud to bring forward proposals that will end the unfairness inherent in the system and secure a fair, decent and simple state pension fit for the 21st century. These reforms will transform pension saving in this country for millions of people.”

Currently just under half of pensioners are eligible for means-tested Pension Credit to top up their state pension but around 1.6 million pensioners don’t claim, leaving them with a basic income of below the £132.60 guaranteed credit. The extent of reliance on means testing means that people cannot be sure they will benefit from the savings they put aside.

State pension reform would underpin existing plans to automatically enrol people into workplace pensions from 2012, bringing between 5-8 million into saving for the first time.

A state pension for future pensioners would not involve increases in public spending dedicated to state pensions. Any contributions accrued by people under the current pension system would be honoured.

Notes to Editors:

  • 'A state pension for the 21st Century’ is available at<

    It contains:

    • two options for reform of the state pension that better support saving for retirement
    • the factors to consider in designing support for future pensioners on low incomes
    • the most appropriate mechanism for determining future changes to State Pension age.
  • The current state pension system is made up of:

    • Basic State Pension;
    • Additional State Pension (also known as: State Second Pension (S2P) from 2002; State Earnings-Related Pension Scheme (SERPS) from 1978);
    • Pension Credit.
  • The Old Age pension was set up in 1908 when the average life expectancy was 41. In 1981 an average 65-year-old man could expect to live for another 14 years, today it’s over 21 years, by 2050 it will be over 25 years.
  • The Pensions Bill currently going through Parliament is taking forward, among other things, changes recommended by an independent review of automatic enrolment, to ensure that there is a balance between costs and benefits for individuals and a more proportionate impact on employers.<

kevin's picture
Joined: 09/03/2009

Steve Webb, Minister of State, Department for Work and Pensions, made a statement to the House of Commons on Monday 4 April on state pension reform.


Mr Webb told MPs the Government had published a Green Paper which looks at whether the "..existing pensions system is suitable for meeting the challenges of the future."

Shadow Minister for Work and Pensions, Rachel Reeves, responded to the statement on behalf of the Opposition.

Read the statement and the views expressed by MPs in Commons Hansard. 

Oral statements

Oral statements are made after Question Time (or at 11am on a Friday). Statements normally relate to matters of policy or government actions. At the end of a statement, MPs can respond or question the government minister on its contents.<

kevin's picture
Joined: 09/03/2009
anonymous (not verified)
anonymous's picture

A state pension for the 21st century: A summary of responses to the public consultation<

anonymous (not verified)
anonymous's picture

Post Office employees such as myself were taken out of SERPS.  Will this disqualify me from getting a flat-rate pension when I reach my 65th birthday in 2017?

John's picture
Joined: 09/03/2008

Pensions are not a strong area for us as they can be extremely complicated and we simply don't have the resource.  That said, there are resources you can use. At the Post Office you should have support for your pension either internally of from your pension provider. As well as sending you annual statements they are there to tell you what you current pension entitlements are.

Also the Citzens Advice Bureau have an overview (click here)<

They include this on SERPS and State Second Pension (S2P)


State Pension

State Pension is a benefit for people of state pension age< that is based on their national insurance contributions. You do not have to have stopped working in order to get State Pension. Although you can claim it when you reach state pension age you do not have to claim it at that age. If you prefer, you can wait and receive it later, either as a lump sum with your normal weekly pension or as an increased weekly rate of pension. This will mean you get more State Pension<. You have to make a claim to get State Pension.

If you have not paid enough national insurance contributions yourself, but are or have been married or in a civil partnership, you may be able to get some State Pension based on your husband, wife or civil partner's national insurance contributions<.

If you are 80 or over<, you may be able to get some State Pension even if you have not paid enough national insurance contributions.

State Pension is administered by the Pension Service in England, Wales and Scotland, and by the Social Security Agency in Northern Ireland.

How much is State Pension

State  Pension is made up of a basic pension, plus any additional pension<, graduated pension< or extra pension< you may be entitled to.

Basic pension

There is a set amount< of basic pension. If you have not paid enough national insurance contributions to get a full pension, you may get a percentage of the set amount.

Additional pension

Additional state pension is now known as the state second pension but it used to be called ‘SERPS’ (state earnings related pension). SERPS is paid on top of the basic pension and is based on your earnings from 1978 to 2002. From 6 April 2002, if you are working and haven’t claimed State Pension, you've accrued additional pension under a scheme called the state second pension (S2P) and not under SERPS. Any additional pension accrued under SERPS will not be lost.

However, if you are or were ‘contracted out’ of the additional state pension scheme and contributing to an occupational pension, a stakeholder pension or personal pension scheme, you will not accrue any additional pension for the period you are contracted out.

If you're contracted out of SERPS/S2P, you may want to check that you made the right decision. Some older people are likely to be financially worse off by contracting out.

The Pensions Advisory Service has a useful online contracting out planner to help you work out what's best for you. For more information go to<.

The rules for contracting out of the additional State Pension will change in April 2012. The changes mean that you won't be able to contract out through a money purchase occupational pension, a personal pension or a stakeholder pension.

If you are contracted out through one of these schemes on 6 April 2012, you will automatically be brought back into the additional State Pension.

If you belong to a defined benefit pension scheme, such as a final salary scheme, you may remain contracted out.

Your pension provider should contact you before the changes happen to tell you what is happening to your scheme.

For more information on the changes to contracting out, go to<.

A very small number of people above a certain age, were wrongly advised to opt out of SERPS between July 1988 and April 1997. If you are in this group of people, you could be entitled to compensation.

You should first write to your pension provider, asking them to explain why you were advised to contract out of SERPS and to review whether this was the best decision for you.

If you are unhappy with their response, or feel that you were given the wrong advice, you can complain using their internal complaints process. If this does not resolve the problem, you can take your complaint to the Financial Ombudsman.

If you want more help before you contact your pension provider, contact The Pensions Advisory Service at<.

If you contributed to a pension during these years and have lost track of what happened to it, you can contact the Pensions Tracing Service at<."