Welfare overhaul helps aged and disabled

The state pension will not be enough, the government fears

A major shake-up of the welfare state is one of the key policies announced in the Queen's speech.

The Welfare Reform Bill will introduce stakeholder pensions for the first time, aimed at the millions of people who cannot join an occupational pension scheme and who cannot start personal pensions.

They include the self-employed, those on short-term contracts, the low-paid, those who change jobs frequently and those in part-time work, many of them women.

Stakeholder pensions were in Labour's manifesto commitment and follows the announcement last summer of a wide-ranging review of pensions.

They are based on the belief that the state pension is insufficient for those kinds of people as they reach retirement and the pensions are described as "secure, flexible and value for money".

Aid for disabled

The government says the Welfare Bill will also give more help to those in need by reforming benefits for people with long-term illness or disabilities.

The Queen told parliament: "My government has made clear its determination to modernise the welfare state upon clear principles of work, security, fairness and value for money."

The measure is intended to help disabled people identify what they can do, as well as what t hey cannot do, and help those who want to work to make plans.

The Department of Social Security said: "It would provide more help for those disabled people with the greatest need, in particular severely disabled children, those disabled at birth or early in life who do not have the opportunity to work, and people with the highest care needs and the lowest incomes."

Benefit interviews

Incapacity benefit will also be modernised.

A key plank of the reform is a "single gateway" to the Welfare-to-Work initiative.

Job seekers will have to see a personal adviser

All claimants would have to attend interviews with employment advisers before receiving benefits.

As revealed this month, widows benefit will be overhauled, to provide a lump sum payment of £2,000, followed by a weekly benefit for six months for those without children, longer for those with children - until the youngest is no longer dependent.

The benefit will be given to widowers for the first time.

The new bill will also introduce pension-sharing for divorcing couples, so assets can be divided fairly on divorce.

"Pension-sharing would help to reduce the number of women who are poor in retirement," the DSS said.