At last the coalition has published its pensions green paper, to generally positive response. Most commentators - including Independent Age - have given a cautious welcome to the plans to simplify the current system. For us, the fact that a third of today's pensioners are not claiming the means-tested element of the pension means that the current system has failed and needs reform. However we should be careful about at least two elements of the green paper.
Firstly, the very complexity of the current system is hampering attempts to understand what is proposed by way of reform. At the moment even pensions analysts are struggling to understand how the new proposals for a more generous flat rate pension can be achieved without either costing more or having some 'losers' as well as gainers. As one Conservative MP asked us, 'if cost neutral, who loses?' Or as the GMB union puts it with more hostility, 'the real question is what the government is taking away, not what it's promising to provide'.
At this stage, probably only the government itself (and particularly the impressive pensions minister Steve Webb) has the data, analytical capacity and understanding of the current proposals to answer this question, but it will become clearer. The second reason we should be cautious is that the green paper does not propose a flat rate pension outright but as an 'option' and it also suggests an alternative, which is essentially a speeding up of plans to phase out the current second pension.
Amid all the headlines about a £155 flat rate pension for all, this option has rather been overlooked. It may be, though, that the cautious heads inside the Treasury and elsewhere see this as their banker bet if the flat rate idea runs into problems.
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