Pension funds have urged the government to push ahead with plans to create a single-tier flat-rate state pension.
Prime Minister David Cameron has 'personally put the brakes' on the plans due to concerns over how pensioners would react to the proposals, the Financial Times reported today. A white paper on the reforms due later this year will now be 'consultative rather than prescriptive', it added.
Joanne Segars, chief executive of the National Association of Pension Funds, warned against any delay to the reforms, which she said were 'long overdue' and key to the success of pensions auto-enrolment, which begins to be introduced next month.
'A better state pension is absolutely key to the success of auto-enrolment, which will bring millions of workers into a pension, many for the first time. These new savers need to know that it pays to plan for their old age, and that they won't see their savings means-tested away,' she said.
'The UK has one of the meanest and most complicated state pensions in Europe, and even financial experts struggle to work out what their own pension will be. We need a simpler, flat-rate state pension that sets a clear foundation for people to build their own retirement savings on.
'The government must stick to the plan to improve the system and not slow things down with more discussion and reviews.'
Plans to move to a single-tier state pension, set at around £140 a week, were first made public by Chancellor George Osborne in his March Budget. The reforms will also involve the state pension age being automatically linked to increases in longevity.
Details of the proposals had been expected this summer, but pensions minister Steve Webb revealed in July that they had been delayed until the autumn due to the 'scale, complexity and importance' of the reforms.
