'Rethink' on pension reform plans

Plans for a major overhaul of pensions reportedly face being watered down after David Cameron demanded a rethink to stave off a potential backlash from older voters.

The Prime Minister has called for reforms introducing a flat-rate £140 payment rate to be re-examined, according to the Financial Times.

Under the planned changes higher earners will be stopped from making additional contributions to increase their pension pot and those already claiming the payments will not be eligible for the new rate.

In an attempt to head off a repeat of the "granny tax" row sparked by budget changes that lowered pensioners' personal allowance rates, the PM wants the plans, due in autumn, to be more consultative, according to the FT.

"The proposals are not off the table but the white paper will probably look more 'green' than white," referring to the traditional colour of the different stages of government policy papers, a source told the newspaper.

A DWP spokesman said: "As announced in the Queen's Speech the Government is committed to reforming the state pension system.

"A white paper will be published this year which will outline the key features of a single-tier pension system. Making the system simpler and fairer."

In June, Mr Cameron said there would be a "straightforward flat rate of around £140 a week" instead of a complicated pension system.

He added: "The act of simplification is incredibly important, it's going to pull thousands out of means testing, it's going to help make saving pay. This quite simply doing the right thing by those who have done the right thing all their lives and I'm proud that we are the Government taking this forward."

It comes as a report by the RSA calls for employers to switch to "collective" defined contribution pension schemes that allow for a sharing of risk instead of traditional schemes. The move would boost pensioner private pension incomes by nearly 40%, the think tank said.