Following reports that suggest a difference of £10,000 a year between the highest and lowest state pension recipients, pension experts are predicting the Government’s proposals for a flat rate pension will soon come into effect.

Tom McPhail, Head of Pensions Research at Hargreaves Lansdown, said:

“This is probably the warm up act before the Government unveils plans to move towards a flat state pension of a little over £140 a week for all.

“The Government is right to point out the current system is horrendously complicated. Consequently building any accurate idea of what you might get from the state is nigh on impossible. By moving to a simple £140 a week the Government can provide everyone with greater certainty over what they will get from the state, allowing them to properly plan what they need from their private retirement savings.

“From 1 October 2012 millions of people will be automatically enrolled into a workplace pension. If the Government fails to publish its plans for the state pension by then this long awaited reform could be thwarted by negative publicity, because under the current system lower income workers could end up simply replacing means-tested state benefits with the savings they make.

“Once the plan is announced, we can expect skirmishes on the way to a flat rate state pension as some people stand to lose out as a result of this reform. Middle and high earners would do better under the current system than a flat £140 a week. Public sector workers are also likely to be unhappy as they will be paying an extra 1.4% National Insurance.

“It isn’t clear whether the DWP’s decision to publish these figures this week are a prelude to the publication of the White Paper, or a nudge to Downing Street to get it signed off.”

Steve Webb, the Pensions Minister, said:

“The range of state pension payouts at the moment is simply staggering. The current system is so complex it would baffle even Einstein. Worse, if people have no idea what they will get, they can’t make sure they have enough savings for their retirement.

“We can’t go on playing roulette with pensions. A flat-rate single-tier state pension will restore simplicity and give people certainty instead of chance. And it will provide a sure foundation for further saving.”

Ros Altmann, the Director-General of Saga, said:

“The DWP figures highlight the dramatic difference, with some pensioners getting £200 per week more state pension than others. The reality is that it is predominantly men who get the highest amounts and women the lowest.

“We welcome the prospect of an adequate state pension that would lift most people above means-testing. The new pension system should be fairer and simpler and no longer treat women as second class citizens, but we still need to see the details of the new framework and how the Government plans to implement it in order to ensure fairness.

“The UK’s state pension system is by far the most complex in the world. Almost no one understands it and it is not fit for purpose. It fails to provide an adequate pension income for millions of Britain’s pensioners, particular women and low earners.

“Radical reform is long overdue – at the moment the state pension system relies far too much on mass means-testing, which particularly penalises those who have tried to save for their retirement.”