The introduction of a flat pension has been welcomed by the industry.

NAPF Chief Executive Joanne Segars said:"This is a turning point for pensions in the UK. Over half a million new pensioners a year will get a simpler and more generous state pension, and reliance on means-tested benefits will be slashed.

“For too long we have put up with one of the most complicated and meanest state pensions in Europe.
“This reform provides a clearer foundation for saving for old age. For the first time in a generation, people will know that it pays to save.

"This is a massive step forward for a cornerstone of the welfare state, and also helps those saving into a workplace pension to plan their retirement more clearly.”

The NAPF proposed the ‘Foundation Pension’ in March 2010.

A foundation pension will radically simplify the state pension system by combining the basic and state second pension into a single pension above the level of means-tested benefits.

Charles Cotton, CIPD reward adviser commented on the propsed £140 flat state pension:
“Good employers will welcome the clarity a universal flat-rate pension will bring.  So long as employees have little idea of what the state will pay them in retirement, it will always be difficult for employers to focus minds on the value of the pension schemes they offer.

Employers are investing vast sums in workplace pensions, but all too often our research shows employees don’t appreciate the value of this investment.  One factor is undoubtedly the confusion and widespread ignorance created by the complexity of the existing state pension arrangements.

“This new flat-rate approach to state pensions will make it far easier for employers to communicate the value of their workplace pension provision – which in turn should nudge employers with weaker pension arrangements to improve what they offer.”

This will ensure that people can save for their retirement with the confidence that they will not have their savings eroded by means-tested benefits.

In the budget report, the Government said that it "accepts Lord Hutton’s recommendations as a basis for consultation with public sector workers, trades unions and others, recognising that the position of the uniformed services will require particularly careful consideration. The Government will set out proposals in the autumn that are affordable, sustainable and fair to both the public sector workforce and the taxpayer."