– Institute for Fiscal Studies
The proposed reforms would be a welcome simplification of the current rather complex rules, particularly in the short run, but they also imply a reduction in the state pensions that most people born after around 1970 can expect to receive from the state.
This cut in the generosity of pension benefits for currently young people will help reduce public spending on pensioners in the longer-run as pressures from an ageing population intensify. Reducing state support will also increase the incentives for younger cohorts to save privately for their retirement.
Details of a shake-up of the state pension have been unveiled by the Government. A single flat rate, equivalent to around £144 in today's money, is set to be introduced for new pensioners from 2017 in a bid to simplify the system.