Government denies ruling out flat-rate pension

The government has not ruled out the idea of a citizen’s pension, denying claims that pensions secretary David Blunkett had dismissed the £105-a-week benefit.

Earlier this week Blunkett angered pensions experts by appearing to suggest that the pension – based on British residency rather than national insurance contributions – would turn the UK into a Costa del Sol for benefits tourists.

He was accused of pre-empting the Pensions Commission’s long-awaited report on the future of UK pensions, due out on 30 November.

Several influential groups, including the National Association of Pension Funds (NAPF) and the Pensions Policy Institute (PPI), have championed the flat-rate citizen’s pension as the best replacement for the complex state benefits system.

They have always insisted, however, that recipients should spend at least 10 of their 20 years before retirement living in the UK to be eligible for the flat-rate payments.

A spokeswoman for the Department for Work and Pensions told the Times that the comments attributed to Blunkett were taken out of context.

Retail group Arcadia has closed its final salary pension scheme to new members. It will be replaced by money-purchase schemes, which do not guarantee a defined retirement income.

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