Consultation launched on plan for flat-rate state retirement pot

Ben Southwood
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A CONSULTATION on replacing the means-tested state pensions with a simpler universal flat rate system will be launched this month.

This announcement in the Autumn Statement brought a key part of the coalition’s pension reform closer to being realised, though it will likely be months before the end of the consultation.

A paper from the Department for Work and Pensions on the plan is also due soon.

This came in tandem with confirmation from the chancellor that the value of state pensions will increase 2.5 per cent in April 2013, in line with so-called triple-lock uprating.

These mean that state pensions always increase by at least as much as consumer price inflation, median wage increases, or 2.5 per cent – a good outcome for pensioners when increases in other benefits are being kept below inflation.

But Dr Ros Altmann at over 50s advocacy group Saga called the failure to bring an earlier end to means-testing a “missed opportunity”, suggesting that means-testing diverted money from where it was needed.