WOMEN, carers, the low-paid and self-employed are expected to be the main beneficiaries of a new flat-rate state pension to be outlined in a Coalition White Paper tomorrow.
Worth £144 in today's money, the single-tier pension will be paid to all new pensioners with 30 years of contributions or credits from 2017, but will not go to existing pensioners.
The second state pension, which pays more according to National Insurance (NI) contributions, will be abolished. The changes are intended to simplify the system and reduce means-testing for pension credit, unclaimed by one-third of old people and seen as a disincentive to saving.
Ministers set out plans to overhaul the state pension in early 2011, but internal debates reportedly delayed the White Paper until now.
The new system should be of particular benefit to women, whose state pension is on average £40 less than that of men as a result of moving in and out of the workforce because of motherhood.
However, there will be higher NI contributions for about 1.4 million private-sector and 5m public-sector workers in final salary schemes who have opted out of the second state pension and enjoy a NI rebate.
Employer contributions will also go up, meaning more final salary schemes may be closed.
The extra contributions will add to the pressure on NHS and council budgets, given their high number of final salary schemes.
Shadow Pensions Minister Gregg McClymont said: "These proposals are just half a plan yet they are still delayed by a year ... This government has already established a track record of incompetence and secrecy so we will look at the detail, but it should come clean immediately and set out exactly who the losers are.
"Sensible pensions reform should give people confidence to save, but the government has failed to ensure that private pensions will deliver value for money, and what they are announcing this week is only a half-reform."
SNP MP Eilidh Whiteford said: "Pensions will be more affordable in an independent Scotland than if we stick with the broken, discredited Westminster system, which this week voted to push through harsh Tory welfare cuts in spite of opposition from four-fifths of Scotland's MPs."
Changes are intended to simplify the system