Tuesday, 15 January 2013 09:23
Firms respond to plans for new flat-rate State Pension
Firms have responded positively to Pensions Minister Steve Webb's announcement of the introduction of a flat-rate State Pension of £144 per week.
The minister made the announcement in Parliament yesterday afternoon at the unveiling of a new White Paper into pension reform.
It will see the complicated system of various types of pension changed to one single flat-rate State Pension. Workers reaching State Pension age in 2017 will be eligible for the new rate providing they have worked for 35 years.
Tim Jones, chief executive of Nest, said: "The new flat-rate State Pension will make it easier for all workers to plan and save for their retirement. Together with auto-enrolment, which has given millions new rights to a pension at work, this will provide workers with a solid basis for later life."
Andy Zanelli, head of retirement planning at AXA Wealth, said the change was good news for financial advisers.
He said: "It gives a clear starting point to the retirement income aspect of the overall financial plan. Once eligibility is established there is a clear definite number to factor in which is the core of the retirement plan. The devil will no doubt be in the detail and there may be some who are worse off.The key is to be able to quickly identify those that are significantly affected, communicate the options as early as possible and flex the financial plan accordingly."
Richard Parkin, head of DC and workplace savings proposition at Fidelity Worldwide Investment, said: "We are pleased that the Government has finally committed to roll out the flat-rate State Pension from 2017. It will not only restore simplicity as it marks the end of the convoluted means tested State Pension system but will more importantly provide pension savers with the clarity they desperately need to make informed decisions about their retirement."
Vince Smith-Hughes, retirement income expert at Prudential, said: "The flat-rate State Pension reform will be the biggest overhaul of the system for decades and is a very valuable step forward. The new system improves the safety net for pensioners in the UK but should only ever be regarded as part of an overall retirement plan and the real income shock for many will come when the gap between their current earnings and the State Pension becomes apparent."
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