This is because the level of basic and additional state pension payouts can vary so much in the current system.
According to the latest DWP administrative data, state pension income varies from around £7 a week to £230 a week. Around 130,000 people get £7 or less a week and the same number of people get £230 or more a week.
State pension regulations have multiplied so much over recent decades and made the system so complex that people have no way of working out what they will get a week, and can’t 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 will be replaced by 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.
Dr Ros Altmann, Director-General of Saga, comments:
“The UK state pension system is the by far the most complex in the world. Almost no one understands it and it is not fit for purpose. It fails to provide an adequate pension income for millions of Britain's pensioners, particular women and low earners. Radical reform long overdue - at the moment the UK State pension system relies far too much on mass means-testing which particularly penalises those who have tried to save for their retirement. As we are about to automatically enrol all workers into a private pension scheme, it is vital that the state pension system makes it safe to save.
"DWP figures released today highlight the dramatic difference with some pensioners getting £200 per week more state pension than others. The reality is that it is predominantly men that get the highest amounts and women the lowest.
"We welcome the prospect of a adequate state pension that would lift most people above means-testing. The new pension system should be fairer and simpler and no longer treat women as second class citizens but we still need to see the details of the new framework and how the Government plans to implement it in order to ensure fairness.”
