Flat-rate state pension will slash pensioner poverty, says think tank

Introducing a flat-rate state pension of around £140 per week will cut the number of pensioners living below the poverty line, the Pensions Policy Institute (PPI) said.

The plans to reform the state pension, announced earlier this year, could cut pensioners living in poverty from 16% of all pensioners, as it was in 2009, to 10% by 2025, the PPI said.

In its latest report, The implications of Government policy for future levels of pensioner poverty, the think tank said pensioner poverty has been falling since 1989, when 39% of pensioners lived in households with incomes below 60% of median income.

In March during the Budget, the government announced it would introduce a new, single-tier, flat-rate state pension of around £140 per week in 2015. The aim of the reform is to end means-testing and simplify the pension system.

The reform has been widely welcomed by pensions experts, but in June, the PPI warned in a separate report the flat-rate pension would increase incomes for seven million pensioners whilst reducing incomes for five million.

The payment of £140 per week is more than current basic state pension, which is £97.65, but still below the Department for Work and Pension's official poverty line of £178 per week.