Retirement: State pension may rise to £140 a week

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 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 said.

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