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Government set to overhaul pensions

The Government is expected to embark on an overhaul of the pensions system to ensure that saving for retirement is worthwhile, it has been revealed.

Work and Pensions Secretary Iain Duncan Smith announced a flat-rate state pension that would remove disincentives for lower earners to compile retirement savings.

He revealed the plans in a speech to Age Uk, saying that the current state pension system has become too complex.

This shift could be good news for mothers who are worried about their pensions because they want to take a career break to raise their children.

Mr Duncan Smith argued that the pensions system requires the same kind of simplification that is being brought to the benefits system via Universal Credit.

There is speculation that a single-tier pension could end up being worth an estimated £140 a week.

"We have to fundamentally simplify the system. And we have to make it crystal clear to young savers that it pays to save," Mr Duncan Smith said.

Mr Duncan Smith warned that younger workers are becoming "increasingly cynical" about saving and will not be able to afford a "stable and secure" retirement unless the Government does "something radically different".

Copyright © Press Association 2011

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