Complex pensions system would 'baffle Einstein'

Department for Work and Pensions figures show a system dubbed by ministers so confusing it would 'baffle Einstein'.

And it leaves up to 130,000 women receiving the Additional State Pension of just £7 a week. However they would still receive the £107.45 a week state pension.

The latest DWP statistics show additional state pension income varies from £7 a week up to £230 a week with the lowest earners mostly women, as generations raised their families at home, instead of working and paying National Insurance.

While many held down part-time jobs, they earned too little to meet the minimum requirements needed to qualify for NI contributions.

Dr Ros Altmann, director-general of over 50's group, Saga, said: '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 is 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 enroll all workers into a private pension scheme, it is vital that the state pension system makes it safe to save.

'We welcome the prospect of an 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.'

The current state pension is made up of the basic state pension and various additional state pension entitlements such as SERPS (State Earnings-Related Pension Scheme).

Pensions minister Steve Webb said: 'The range of state pension payouts at the moment is simply staggering. The current system is so complex it would baffle even Einstein.

'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.'

New reforms set to be introduced after the next election will see the introduction of a flat-rate state pension for new pensioners.

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