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Pensions minister defends alternative state reform plan

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Webb: ’Legitimate question’

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.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. stick to basics, keep it simple, affordable and understandable. If you know what your state pension will be it makes our job as IFAs less stressful trying to explain and calculate the effect of Graduated Pension, SERPS, SP2 etc, how on earth can the public understand it if we struggle! No more political points scoring from the ranks please!

  2. This government has not only betrayed existing pensioners with this new pension scheme, it’s about to hit some pensioner couples who are also receiving Pension Credit, if an amendment in the Welfare Reform Bill goes through parliament in it’s present form, see below.

    “Quote”
    Welfare Reform Bill Explanatory Notes:

    Page 22
    145. Paragraph 64 amends the State Pension Credit Act 2002 so that a member of a couple who has attained the qualifying age for state pension credit may not receive state pension credit if the other member of the couple has not attained that qualifying age. This is to ensure that all claimants who have not attained the qualifying age for state pension credit are required to claim universal credit and, if appropriate, be subject to work-related conditions of entitlement.

    But if you are single you will still be able to claim when you reach qualifiying age.

    At the moment I receive Pension Credit but it looks as though this will change soon as my wife is ten years younger than myself and with her retirement age going up we will not be able to claim again until I am 77, this makes for a poverty stricken retirment.
    Thanks a lot Cameron!!!

  3. The only real option is number 2: A single flat rate pension where everyone knows what he can get.

    The other option it should not even be contemplated at all. As per the contracting out of employer schemes… it would suffice by stating the minimum contribution required by employer and employee.

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