Pensions minister Steve Webb has admitted reforming the basic state pension will be a tough task following a delay to a green paper proposing a flat-rate benefit.
In October, the Government set out plans to introduce a universal pension and said a green paper would be unveiled by the end of last year.
In December, Money Marketing revealed that the green paper was being delayed and the Department for Work and Pensions would not commit to a publication date.
Speaking to Money Marketing on the reforms, Webb said: “Simplifying a complicated and confusing state pension system will not be easy but it needs to be done.
People need to know what to expect from the state in retirement and to be able to save with confidence on top of this.”
LibDem MP Webb says the Treasury and DWP officials are still considering “a number of options” for state pension simplification and no final decisions have been made.
He says: “We will ensure that any proposals for reform take proper and fair account of contributions that have already been made and, contrary to speculation, the state pension under any reforms would continue to be based on National Insurance contributions.”
Money Marketing understands the green paper has been delayed because the Treasury and the DWP have not yet resolved how to treat people who have accumulated contracted-out benefits in Serps and the state second pension.
Officials in Whitehall are also considering the treatment of public sector workers who could face increased contributions as a result of the Hutton review and higher NI payments to fund a universal state pension.
Issues remain over how the reform will be funded, with Webb refusing to confirm whether the widely reported payment figure of £140 a week will eventually be proposed.