Outlining the pension shake-up in the Commons this afternoon the Pensions Minister, Steve Webb said:
The overall cost of the new system will be the same as the one it replaces. This is not a pensions giveaway for the next generation. A higher flat pension is only affordable because in the long term people will not become entitled to very large earnings-related pensions through the state system.
But in a world where everyone will be automatically enrolled into a workplace pension with a contribution from their employer it no longer makes sense for the state to be running its own, separate, earnings-related pension scheme.