State pension pay outs range from £7 to £230

British pensioners are receiving anything from £7 to £230 a week in state pensions, according to data from the Department for Work and Pensions (DWP).

The difference of more than £200 a week, equating to £10,000 a year, has led the Government to confirm that the current pensions system will be replaced by a new single-tier pension.

The DWP said that state pension regulations had multiplied so much over recent decades and made the system so 'complex' that people were unable to work out how much they would receive each week, and budget properly for their needs.

According to latest data, around 130,000 people get £7 or less a week while the same number receives £230 or more a week.

The current state pension is made up of the basic state pension and various additional state pension entitlements, with the wide range in pay outs resulting from the large number of additional top-ups available.

The amount of state pension individuals receive is also based on their national insurance contributions throughout their working life. Historically, both state and private pensions are lower for women as they tend to receive a smaller state pension for missing national insurance contributions while caring, and because it is earnings related.

The replacement simple flat-rate pension will be set above the level of the means test, currently estimated to be around £140 a week. The Government hopes the increase will aid those with little or no entitlement to the top-up pensions, most of whom are women.

Pensions minister Steve Webb said that the range of state pension pay outs was 'staggering.'

"The current system is so complex and would baffle even Einstein. Worse, if people have no idea what they will get, they can't make sure they have enough savings for their retirement."

"We can't go on playing roulette with pensions. A flat-rate single-tier state pension will restore simplicity and give people certainty instead of chance. And it will provide a sure foundation for further saving," he said.

Ros Altmann, director general of Saga said that radical reform was long overdue.

"At the moment the UK State pension system relies far too much on mass means-testing which particularly penalises those who have tried to save for their retirement."

"The new pension system should be fairer and simpler and no longer treat women as second class citizens but we still need to see the details of the new framework and how the Government plans to implement it in order to ensure fairness."

The Chancellor first announced details to reform the state pension system in the March Budget and further details are to be published later in the year.

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