Flat-rate state pension could be £155 a week

Reports suggest the increase is to take into account inflation over the next few years given the system won't be in place until 2015 or 2016 (see the story on This is Money).

Detailed plans are expected to be published next week in a Green Paper, outlining how the system will be introduced (see the State Pension Boosting guide).

The Government said during last week's Budget that it will overhaul the pensions system to include a flat-rate state pension of £140 a week to replace the complicated basic state pension and second state pension system.

A spokeswoman for the Department for Work and Pensions says: "Speculation of what the benefit rates would be in years to come is just that.

"We have been clear that reforms for future pensioners would bring in a simple, contributory, flat-rate support. We will be bringing forward a Green Paper to consult on options shortly."

The present full basic state pension is £97.65 a week, topped up to £132.60 a week by pension credit for individuals 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 Savings Stay safe: Safe Savings