The government has set out its intention to "transform pension saving in this country" with the launch of a green paper consultation on a single-tier £140 state pension.
If approved, it will replace existing means-tested arrangements for new, but not existing, pensioners from 2015 or 2016.
The current full state pension is £97.65-a-week, but can be topped up to £132.60 with pension credit.
This is to be replaced by a new £140 flat rate, with inflation expected to push this up to £155 by the time it comes into effect.
Pensions minister Steve Webb unveiled the consultation - A state pension for the 21st century - today, saying it was a radical redesign of the current system that would, over time, lift millions out of means testing.
Webb said: "The current state pension system is dogged by complexity and confusion, it makes it very difficult to save for retirement and leaves millions of people relying on complicated means-tested support.
"I'm proud to bring forward proposals that will end the unfairness inherent in the system and secure a fair, decent and simple state pension fit for the 21st century."
The consultation also solicits views on how to set the mechanism for future changes to state pension age and how to help future pensioners on low incomes.
The single-tier pension will still be based around the contributory principle and will not involve increases in public spending for state pensions, the Department for Work and Pensions said.
Secretary of state for work and pensions Iain Duncan Smith says the move sends a clear message people will be better off in retirement if they saved.
"Over the years small changes to the state pension system have turned what started as a relatively simple contributory system into a complex mess, leaving people utterly confused as to what the state pension means for them," he said.
New ABI director general Otto Thoresen says: "The proposals to create a flat-rate pension are an important move towards a simpler and more understandable pension system.
"It will help people plan better for their retirement, stop people falling into the means-testing trap and ensure that it always pays to save."
CBI chief policy director Katja Hall adds: "One major hurdle the government must overcome is the increase in cost to employers of providing final salary pensions to employees, as a result of abolishing the contracting-out rebate in defined benefit schemes."
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