Self-employed set for higher state pensions

Self-employed people will receive a higher state pension. Iain Duncan Smith, the Work and Pensions Secretary, will pledge that people running business will benefit from his plan to scrap means-testing and bring in a flat-rate pension of about £155 a week.

Many of the 3 million self-employed are about £26 a week worse off when they retire because their lower national insurance contributions (NICs) do not count towards the additional state pension, which tops up incomes of thosenot in a private or occupational scheme. In future, the self-employed will get an extra £4.66 of pension a week for every year of NICs they make for up to 30 years, providing a pension of about £140 instead of the current £97.65.

The other big winners are women who do not build up NIC entitlements because they take career breaks to bring up children or act as carers.

The drive to cut the incapacity benefit numbers will be stepped up today, when the first of 1.6 million claimants get letters saying they will be reassessed on whether they are able to work.