Magazine article Public Finance

Purnell Plans Simpler Second State Pension

Magazine article Public Finance

Purnell Plans Simpler Second State Pension

Article excerpt

Pensions minister James Purnell this week floated a 'radical simplification of the state second pension - and claimed that the cost would not breach the financial cap' proposed by the Pensions Commission last year.

The Department for Work and Pensions published its response to the pensions green paper consultation on October 30. It formalises two main government reforms: moves towards a flat-rate second pension and a devolved agency set up to manage the incoming National Pensions Savings Scheme.

Launching the document, Purnell said it was critical that the DWP simplified the second pension, which acts as a meanstested top-up to the basic state pension. He proposed replacing the complex calculations linked to annual earnings with a fixed sum paid to everybody, based on the time they have spent working or caring.

Purnell suggested that the figure could be £1.40 per week for every qualifying year, but it is not clear whether that qualifying period would be capped.

If this is adopted in the government's final proposals next year, it could be introduced in 2012, when ministers also plan to restore the costly link between the basic state pension and earnings. …

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