State pension reforms receive royal assent

The Pensions Bill 2013-14, which includes reforms to the state pension, received Royal Assent on 14 May.

Steve Webb

The reforms, which were first announced in the 2012 Autumn Statement, aim to create a simple flat-rate pension, the full level of which will be set above the basic means test, currently at £148.35.

The government said that in the first 10 years following the reforms’ implementation in 2016, it expects around 650,000 women to benefit from the single-tier valuation of their pension, receiving on average £8 a week more in state pension.

Ten qualifying years of national insurance contributions will be required to receive any state pension under the reforms, and for people who start their national insurance record after the reforms are introduced, the full level of the new state pension will be based on 35 years of national insurance contributions.

The government has also introduced the triple-lock guarantee to ensure value of basic state pension will rise by highest of inflation, earnings or 2.5% for the duration of this Parliament.  

The new state pension legislation is contained in the Pensions Act 2013-14, which also provides for other reforms to the state pension age, bereavement benefits and private pensions.

Steve Webb (pictured), pensions minister, said: “The new state pension will replace the current complex mix of basic and additional state pension, which successive governments have tinkered with so much over the decades.  

“It will give people clarity and confidence about what income they will get from the state in their retirement. 

“In addition, the state pension reforms will benefit those who have historically done poorly under the current two-tier system.

“I want to see us build a fairer society within a stronger economy. That means ensuring people have a simple, better state pension in retirement that protects them from poverty and provides a solid foundation for them to save for their future.”