Budget 2011: £140 a week state pension planned

The Government said earlier this month it will overhaul the pensions system to ensure it "pays to save" for retirement. At the time it didn't officially state a desired rate, though the £140 figure was well known.

The Department for Work and Pensions will shortly publish a Green Paper to consulton options for reform, though any changes are still years away.

Many people have already paid to top-up their state pension. The Government says it will "honour contributions to the current system".

Osborne said: "The Pensions Minister, the Pensions Secretary and I have worked together to develop options including a new single-tier pension.

"It would be simple; based on contributions; it would be a flat-rate, so people know what to expect."

The present full basic state pension is £97.65 a week, topped up to £132.60 a week by pension credit for those who do not reach that threshold via other income.

Some also qualify for a second state pension, usually a much lower sum than the basic pension.

However, the system is so complicated few people can work out how much second state pension they will get. Pensions Minister Steve Webb even said millions 'don't have a clue' about state pensions earlier this year.

Further reading/Key links

Pension help: State Pension Boosting Best rates: Top Savings, Top Fixed SavingsStay safe: Safe Savings