DWP data show state pension payouts range from £7 to £230

People cannot budget properly for their retirement income because the amount of state pension payouts differ so much, from £7 to over £230 a week, data from the Department for Work and Pensions reveal.

DWP administrative data show that around 130,000 people are receiving £7 or less a week and the same number are getting £230 or more a week.

The amount of state pension money paid out to pensioners can differ by more than £200 a week - a difference of £10,000 a year - because the level of basic and additional state pension payouts can vary so much in the current system.

State pension regulations have multiplied so much over recent decades and made the system so complex that people have no way of working out what they will get a week and can’t budget properly for their needs, the DWP said.

The current state pension is made up of the basic state pension and various additional state pension entitlements, but it is set to be replaced by a flat-rate state pension for new pensioners set above the level of the means test, currently estimated at around £140 per week.

A white paper is set to be published later this year with further details.

Steve Webb, pensions minister, described the range of state pension payouts as “simply staggering”.

He said: “The current system is so complex it would baffle even Einstein. Worse, if people have no idea what they will get, they can’t make sure they have enough savings for their retirement.

“We can’t go on playing roulette with pensions. A flat-rate single-tier state pension will restore simplicity and give people certainty instead of chance - and it will provide a sure foundation for further saving.”