At a recent conference on pensions, the pensions minister Andrew Smith said that replacing means-tested pension benefits with a flat rate pension would hit the poorest pensioners by £17 per week.
Many people have questioned State pension benefits especially in terms of whether or not they are affordable to the Government in the longer term. Mr Smith said at the conference that the current funding of State pensions is 'affordable and sustainable'.
Mr Smith believes that means-testing is the way forward and not just a higher level of State pension for all, which would involve tax increases. Others believe that increasing tax for higher earners is the way forward.
Our view:
The Government's new Pension Credit will be introduced in April but could be seen by many as a disincentive for the lower paid to save towards their pensions. The pensions minister said that targeting poorer pensioners with means-tested benefits was more important than this possible disincentive.