The state pension is likely to act as a sufficient fail-safe for those who make the wrong decisions regarding their pensions when freedoms are implemented next April, Prime Minister David Cameron has said.

Speaking on BBC Radio 4 yesterday, David Cameron said a single-tier state pension is fairer than "falling back on the tax payer with means tested benefits".

“In the future, because the single tier pension is going to be £148 plus a week rather than £113 with a means test, that means that if people do make bad decisions, they are not falling back on a means test, they are falling back on a strong single-tier pension which I think is an important principle,” Cameron said.

When asked how he would help people to avoid making ‘bad mistakes’ at retirement, he said there is a need for face-to-face guidance and “that is what the guidance guarantee is all about”, adding “we have been working very hard with the Citizens Advice Bureau and others to make sure there is advice".

Cameron also shunned the idea that new freedoms would lead to tax avoidance and further cases of fraud.

“What we are doing here, is making pension saving more attractive and we are doing that very deliberately because we want more people to save more for their pensions. It is easier to expect people to save a bit more if we have got a more generous tax treatment of pensions,” he said.

Furthermore, when asked why there was no consultation prior to the Budget, he said: "Sometimes it is better to make a change in a Budget and then go out and explain and consult afterwards about how you put it into place rather than have all the problems of pre-consultation where you might have found some vested interests really getting at it before the public could actually see the benefit. And I think the public welcome having the freedom not to buy an annuity."

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