Pensions minister rules out means-tested state pension

Ros Altmann

Pensions minister Baroness Ros Altmann has ruled out the Government returning an element of means-testing to the state pension, warning it would “undermine” saving.

A recent survey of 208 advisers conducted by Aegon found only 4 per cent think the state pension will be in its current form in 30 years’ time.

In addition, two in five (39 per cent) think the Government will revert to means-testing and 41 per cent expect the triple lock will be scrapped.

But Altmann says: “Such speculation is irresponsible and unfounded. The new state pension will hugely reduce the reliance on means-testing ‎for future pensioners.

“Means-testing would undermine the important incentives to both save more or work longer for those who want a better later life income. We will keep our promise to protect the triple lock.”

From April 2016 new retirees will receive the single tier state pension of roughly £150 a week.

However, two thirds of people retiring next year are due to miss out on the full amount, mainly because they were contracted out of the state second pension.

The Government has also committed to the triple lock on the state pension for the life of this parliament. This means payments will rise by the highest of earnings, CPI inflation or 2.5 per cent.

Aegon managing director of retail Duncan Jarrett says: “It’s concerning to see such a resounding number of advisers foresee more uncertainty on the horizon.”

He adds: “We need to get better as an industry at highlighting to individuals how much they are due to receive, so they can then work out how much private pension they need to make up the gap between this and their aspirational income in retirement.

“If someone were to buy a state pension at retirement it would cost at least £273,000 as a one off payment to secure a weekly income of £151.25.”