'Decent' state pension could be £140 a week

The state pension could be increased to about £140 a week under Government plans to ensure everybody has a "decent" income in retirement.

Ministers are drawing up plans to sweep away the means-tested system and introduce a new flat-rate pension worth considerably more than at present.

The basic state pension is currently £97.65 for a single person and £156.15 for a couple.

Means-tested top-ups for the poorest ensure single pensioners have an income of at least £132.60 and couples get £202.40.

Scrapping the complicated and expensive system is expected to save enough money from reduced bureaucracy to pay for the £140-a-week pension.

The move would benefit everybody in retirement, including the better off.

But it would be a particular boost for women, many of whom lose out on the state pension after taking time out of work - and national insurance contributions - to bring up children.

Ministers hope to implement the new system before the next general election, scheduled for 2015.

It is being worked out by Work and Pensions Secretary Iain Duncan Smith and Pensions Minister Steve Webb. A Green Paper is to be published later this year.

Business Secretary Vince Cable said today that it was a Liberal Democrat idea that had been developed by the party over several years in opposition.

"This is a big idea that my colleague, the Pensions Minister Steve Webb, has been working on and indeed, we worked on it for years in opposition," Mr Cable told BBC Radio 4's Today programme.

"It's to make sure people can look forward in retirement to a good state pension without means testing. We need something people can rely on.

"What he's proposing is very radical. It will take time to introduce."

A new "single tier" pension of £140 a week would give an income of £7,280 per year or £14,560 for a pensioner couple.

The new system would probably be based on residency in Britain and not on National Insurance contributions.

A spokeswoman for the Department of Work and Pensions said: "The Chancellor has confirmed that the Government will improve the quality and accessibility of pensions in the Spending Review period.

"We will be bringing forward proposals for reform in a Green Paper later this year.

"Our aim will be a simple, decent state pension for future pensioners, which is easy to understand, efficient to deliver and affordable."