Pensions minister Steve Webb has defended the Government’s “legitimate” decision to consider an alternative to a £140 flat-rate single-tier pension, suggesting there are question marks over the radical proposal.
On Monday, the Government unveiled its long awaited state pension reform green paper which contained two options – the widely anticipated single-tier pension of around £140 at today’s prices alongside the surprise option of accelerating Labour’s plans to make the second state pension a flat rate for all pensioners by 2020 rather than by the mid-2030s.
In an interview with Money Marketing following publication of the paper, Webb says there are genuine questions hanging over the single-tier option.
He says: “It would be wrong for me to pre-empt the outcome of the consultation. There have to be options and there is a question mark over whether you go for incremental change or a big bang. There are some aspects of a big bang that will have a big impact.
“In opposition, it is easier to be clean cut about it but I think there is a legitimate question about whether to go for incremental change or a big bang.”
Saga director-general Ros Altmann says pursuing an acceleration of Labour’s proposals instead of the new flat-rate pension would be a cop-out.
She says: “The alternative is a cop-out and would merely prolong the complexity and inadequacy of the current system. The only realistic option worth considering is the introduction of a single-tier pension. This is truly a brave proposal and long overdue.”
Hargreaves Lansdown head of pensions research Tom McPhail says: “There are legitimate questions about incremental versus big bang change but I think we have discussed and answered those over the last couple of years. The majority of observers, myself included, would regard the implementation of the incremental option as a significant failure.”