Work and Pensions Secretary James Purnell announced yesterday that he would be launching a study into the impact of means-tested pension benefits on personal accounts.
This is the first time the Government has acknowledged the issue of means-testing which is threatening to derail the introduction of personal accounts in 2012 because it will leave some savers ultimately worse off than if they do not join the scheme.
The study will look at how many people could end up worse off if they save into a personal account and will look at solutions to overcoming the problem.
Research bodies including the Pensions Policy Institute and the Institute for Fiscal Studies are being invited to contribute to the study as well as opposition parties and charities.
The report is due to be published towards the end of this year.
Hargreaves Lansdown head of pensions research Tom McPhail says: “Introducing an investigation is a way of blocking the issue off until the Pensions Bill has become an Act. It is a way of parking a thorny issue until they manage to push the legislation through.”