Chancellor George Osborne has confirmed the government will implement a single-tier state pension.
He said the current system is "inbelieveably complex" and adds the proposed system will be flat-rate and still based on contributions.
Osborne also said the new single-tier pension is likely to be worth £140 per week.
The new system, the Chancellor said, will not apply to current pensioners and will take several years to implement.
He added a single tier system would end contracting out for defined benefit (DB) schemes, which has already been banned for defined contribution (DC) schemes from April 2012.
However, Osborne said the government will "investigate the potential impact on employees and schemes" of ending contracting out.
Osborne also said today the government aims to implement a more automatic way of increasing the State Pension Age based on regular reviews of longevity. It will reach 66 by 2020 and 68 by 2048.
In March, Iain Duncan Smith said the government was ready to bring in a flat-rate pension and pledged to end means-tested pension credits and contracting out.
The government previously promised a green paper on a universal state pension by the end of 2010, but it is believed confusion over contracting out caused a delay.
Unconfirmed rumours say £140 per week would be the usual amount and £100 for those who have contracted out.
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