Making pensions clearer must be a priority for all

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The government has committed itself to a radical, and very welcome, change in the way the state pension will work with many women getting more and the whole system getting much simpler.

The change comes in the form of a new Bill proposing a single, flat rate payment for anyone reaching pensionable age from 2015.

The level will be set at £140 a week in today’s money and will grow with inflation.

The change allows for everyone to know exactly what to expect and not have to worry about whether saving up for older age will actually count against the state pension they might receive.

Importantly, the move will get rid of a whole load of fiendish pension complexity surrounded in jargon.

There are also a few other things that you need to know – most of it reassuring.

First, anyone who has built up an extra pension pot in the state system will have it honoured in full.

Second, this is for everyone – whatever their work history – and so is particularly beneficial for women who often have an interrupted employment when they have children, and for the self-employed.

Third, and this is the wrinkle, it will only be available to those retiring after the implementation date.

The old system, with all its complexities, will remain in place for those who retire earlier – even by a day – and I have no doubt that my postbag will bulge for a while with letters from those affected.

All in all though this change has to be right. A predictable state pension that allows people to save for their old age with confidence about what they will receive must be a good thing.