Pensions: What does £140 a week really mean?

So what's being offered? A £140 weekly flat-rate universal state pension for all individuals. That compares to the current £97.65 weekly rate for a single person and £156.15 for a couple. It works out as a rise of 43% for a single person, and 79% for couples.

As Victor Meldrew might say, "I don't believe it" Your cynicism is justified. A big rise like this for Britain's 12.5 million state pensioners will cost the public purse at least £11.4bn, and probably more, according to David Heaton, of Baker Tilly Tax and Accounting. The rise would have to be funded by raiding other benefits for pensioners.

So what will they whip off me? Your bus pass is safe, but your pension credit probably isn't. Neither is the state second pension, known to many by its former name, Serps. Yes, there will be savings by creating a one-size-fits-all pension, but not £11.9bn-worth. Currently pensioners on the basic £97.65 a week can apply for pension credit, which for 2010-11 tops up a pensioner's income to a guaranteed minimum of £132.60 if you are single and £202.40 if you have a partner. It's probable that this pension credit (a favourite of Gordon Brown's) would be cut to ribbons, or possibly axed altogether. And the government has already said it is lopping 10% off council tax benefit, which is granted to many pensioners.

Why can't you be more specific? The £140 figure was apparently leaked to the Daily Mail, then heavily reported on the BBC, but ministers have kept schtumm all week. However, there haven't been denials, either. Officially, all the Department for Work & Pensions is saying is: "The chancellor has confirmed that the government will improve the quality and accessibility of pensions in the spending review period. We will be bringing forward proposals for reform later this year. Our aim will be a simple, decent state pension for future pensioners, which is easy to understand, efficient to deliver and affordable."

When are they going to do this? A green paper on state pensions will be published in mid to late November. Only then will we see how much of the speculation is true. It may turn out to be a bit of political kite-flying. If it does go ahead, don't expect the £140 a week to be introduced until 2015 at the earliest. And, of course, £140 a week in 2015 is not the same as £140 today.

Will everybody qualify for the £140 a week? This is something of a political hot potato. Since Beveridge, state pensions have been based on the contributions principle – you pay in through national insurance, and if you make a full record of payments (you need to pay for 30 years) then you qualify for the full state pension. Earlier this week it looked as if the government was going to dump the contributory principle in favour of a residency test. This is a key part of the Lib Dem citizen's pension strategy, championed by Steve Webb, now the pensions minister. But it emerged later that the government intends to keep the contributory principle. Perhaps it was mindful of the reaction from working people who have paid in full (and even paid extra to cover periods when they were out of the workforce). "It sums up everything that is wrong with this country. You work all your life and contribute fully to the system and you end up no better off than those who haven't contributed a penny!" was the (much-recommended) reaction on the Daily Mail's talkboards.

Nonetheless, Webb appears keen to do something to improve the lot of stay-at-home mothers, carers and others who take career breaks.

What's happening to the state second pension? It's already withering on the vine, and the higher universal pension may see it go altogether. State second pension (also called the additional pension, or AP) provides a top-up to the basic state pension based on your earnings. All employees (but not the self-employed) have to contribute towards the AP unless they make alternative arrangements by contributing to an occupational or personal pension scheme that is contracted out.

But the rate at which AP builds has already been slashed in half, with a flat-rate introduced from 2030. The green paper may make further changes to cut costs. But removing accrued rights to an AP will be very thorny.

Will the £140 be available only to new pensioners? This is another great unknown. Already there's talk of a "pensions apartheid" dividing those retiring before 2015 from those afterwards.

Is there anything I can do to make these changes work for me? Advisers are recommending that people about to retire may want to defer taking their state pension until the new rules come in. Others are saying there is no point in "buying back" any missing years in your NI record, as it may be a waste of money. So wait until the new rules appear before topping up.

The other decision will be about contracting out. People who do this receive a rebate they can put into a personal pension, but, in return, they get a lower additional pension from the state. Advisers say you may as well take the rebate money as, in future, it may not affect your state pension entitlement.