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Fears remain over Govt state pension reform

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Fears remain that the Government will water down plans to radically reform the state pension system, despite work and pensions secretary Iain Duncan Smith claiming the coalition is committed to introducing a single-tier system.

Last month, reports claimed prime minister David Cameron had called for a re-think of plans to introduce a single-tier, flat-rate state pension worth around £140 a week due to concerns the reform may not find favour with core Conservative voters.

Following the reports, senior Liberal Democrat backbench MP Stephen Lloyd told Money Marketing the reform remains “rock solid”.

Addressing the Conservative conference this week, Duncan Smith said: “We are creating a single-tier pension, which will mean if you contribute you will receive a pension above the means test.

“The single-tier will also ensure that those, such as mothers who have taken a break in work, will receive full contributions for that time giving them a chance of their own full pension for the first time ever.”

But Hargreaves Lansdown head of pensions research Tom McPhail says: “I do not think we will get the original vision that was sold to the industry of a transformational, swift, bold reform of the state pension into a simple structure within a few years.

“Instead I think we will get a much more measured reform which could take decades to implement and which does not deliver the simplicity and clarity which the industry has been demanding.”

Keyte Ltd director Robin Keyte says: “It is concerning that nobody is saying exactly how or when the single-tier state pension will be introduced because it is a vital reform.”

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