New state pension ­winners and losers

FROM 2016 a new single-tier state pension will replace the existing two-part system. The aim is to reduce the complexities of the system and provide clarity regarding the likely value of income on retirement.

However, research suggests the impact could be wide-ranging.

The flat-rate state pension will apply to new pensioners from 2016, and is expected to be worth around £146 a week.

The reforms will see a merging of the state second pension with the basic pension, along with the end of derived entitlement to the basic state pension, whereby a married or widowed individual receives a pension based on the national insurance contributions made by their partner, rather than their own working history.

A recent study from the Institute for Fiscal Studies suggests that some individuals who are close to the state pension age will see a boost to their state pension entitlement as a result of the changes.

Those most likely to benefit under the new system include: individuals who have spent long periods out of work or in low paid jobs; the long-term self-employed; and those who chose to contract out of the earnings-related second state pension.

However, the study also suggests that, in the longer term, many individuals will see a reduction in their state pension income, with the exception of the long-term self-employed.

Those expected to lose out are: younger workers, especially those born after the mid-80s; higher earners, who will experience a more significant reduction than lower earners; and those who would receive a state pension on their partner’s record, but may not be able to in the future. However, those paying a married woman’s reduced rate may be protected.

Whatever impact the reforms may have on you, it is highly likely that you will need to supplement your state pension by means of a company or private pension scheme.