The government has hit problems with the reform of the state pension due to contracting-out and will now delay releasing a consultation paper on it, Ros Altmann, director general of Saga says.
A Green Paper and consultation on increasing the state pension to a widely-anticipated flat-rate £140 per week were expected before the end of the year.
However, with just 14 days of 2010 left, speculation over a delay and its causes is growing.
George Osborne said in Parliament in mid-November the government would work towards a better state pension "as quickly as possible", but since then no consultation has been launched.
Altmann says it is contracting-out that has "thrown a spanner in the works", as a flat-rate pension would necessitate joining basic and second state pensions into one payment and ending contracting-out.
"Ending the contracting out of state pensions would bring in an extra £8billion a year of much-needed revenue, to offset the costs of a higher state pension and would also save employers money in the long-term too.
"However, this would mean that public sector workers, employers and those with private sector contracted-out pension schemes would have to pay the same rate of national insurance as everyone else; at the moment, these workers pay the so-called 'contracted-out rate' which is lower than the full rate.
"Could the Government be frightened of asking public sector workers to pay more National Insurance?"
The DWP has refused to confirm a publication date for the Green Paper and consultation.
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