Higher state pension 'would not cost more'

A simpler, more generous state pension of £140 a week would remove millions from benefits and provide an incentive to save without costing taxpayers more than the current system, a study argues.

Research for the National Association of Pension Funds found that under the existing system a third of pensioners would be eligible for the means-tested pensions credit by 2055, but under a single-tier state pension this would fall to 5 per cent. The NAPF said the study showed that of the Government's two options for state pension reform, the single-tier system costs no more than the current system and helps more people.

"It would particularly benefit low earners, women and the self-employed. It would also support 2012 pension auto-enrolment reforms by confirming that it 'pays to save' and that savings will not be eroded by means-testing," the NAPF said.