UK - The government has confirmed plans for a reform of the state pension system, with expectations of a flat-rate pension for all by 2015.

While details are still scarce, with the government expected to unveil a green paper outlining proposals later this year, comments made by business secretary Vince Cable imply a state pension that is paid independently from means testing, while being significantly higher than the current average.

The National Association of Pension Funds (NAPF) said changes to the state pension were long overdue, while PwC said any move to simplify the current system should be applauded.

Joanne Segars, chief executive of the NAPF, said a clearer, flat-rate pension would provide "much-needed certainty" to savers and pensioners and cut bureaucratic red tape.

"Women who are shortchanged by the current system stand to get a much better deal," she added, drawing parallels to the organisation's foundation pension proposals, which would combine the basic state pension and the state second pension to an annual payment of £8,000.

Raj Mody, pensions partner at PwC, said the government should be applauded for its proposals, especially as he believed the end result would mean bigger payments for pensioners.

"The greater simplicity and clarity on expected state pension should help individuals with their retirement planning - it should also make it easier for companies when considering the future retirement income of employees," Mody said, adding that a flat-rate pension gave companies a starting point from which they could base calculations for additional retirement provisions.

The Department for Work and Pensions was unable to confirm exact details of the proposals, instead pointing to chancellor George Osborne's recent comprehensive spending review, in which he said the government intended to improve the quality and accessibility of pensions.

"We will be bringing forward proposals for reform later this year," it added.

"Our aim will be a simple, decent state pension for future pensioners, which is easy to understand, efficient to deliver and affordable."

Meanwhile, companies see the implementation of new pension tax relief regulations by next April as a challenge, Aon Hewitt has warned.

Almost a quarter of companies said they were sceptical of their ability to be prepared by the 2011 deadline, citing a lack of resources.

Tony Baily, principal consultant at Aon Hewitt, noted that although the reduction of the annual allowance will not take effect for another six months, some pension funds have already been affected by the change.

"Between now and next April, companies need to review their pension remuneration and reward policies for the high earners who are affected by the tax changes, make their policy decisions and then communicate the changes in order that members can make informed choices," he said.

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