Is the Government doing a U-turn on the flat rate state pension?

Earlier this week the Financial Times carried a report that David Cameron has demanded a rethink over the proposed flat rate state pension, announced by Chancellor George Osborne in his Budget last year.

Following the original Budget announcement, the Department for Work and Pensions published a green paper outlining plans to introduce a flat rate pension of £140 per week for future pensioners.

Years of tweaks and reforms have left the UK state pension as one of the most complicated in Europe with many receiving top-up benefits to their basic state pension to provide a liveable income.

The original flat rate pension proposals were likely to benefit those with an incomplete National Insurance record, such as stay at home mums or the self employed. But millions stand to lose out, or at least not benefit, from the proposed reforms including higher earners who would lose their entitlement to a secondary state pension as well existing pensioners (the flat rate pension would only be available to those yet to retire).

It’s this latter group that has made David Cameron jumpy as he is growing concerned that the reforms could anger the ‘grey vote’ ahead of the next general election.

But this has always been the case. Do David Cameron and his Government not talk to each other?

To make matters worse the Government has already delayed publishing its plans for the single flat-rate pension as ministers struggle with unravelling the complexities of the current scheme. It was proposed that a white paper on the new flat rate pension would be published this Spring. This was postponed and will now be published in the Autumn but it is rumoured that the report will be a consultative paper rather than a prescriptive one.

The one small positive bit of news this week was that Pensions Minister Steve Webb denied any rethink on the flat-rate weekly pension of £140 and confirmed a white paper will still be produced this Autumn.

We wait with baited breath…