Minister for Pensions Steve Webb has revealed that permitting more women into the new flat-rate state pension system could result in an additional cost of £4.5bn over a 30 year period.

Speaking during the second reading of the Pensions Bill in the House of Commons yesterday, Webb argued that this would not be a good example of “public spending control”.

Labour’s shadow work and pensions secretary Liam Byrne had previously launched an attack on current proposals that will see 700,000 women born between 6 April 1951 and 5 April 1953 not be eligible for the new single-tier flat rate state pension.

An implementation date of 6 April 2016 would mean the single tier pension would apply to men born on or after 6 April 1951 and women born on or after 6 April 1953.

“Our biggest problem with the Bill is that if the flat-rate pension is so virtuous, its virtue should be enjoyed as widely as possible,” Byrne said. “It should be a universal pension, but it is not.”

NAPF director of policy Darren Philp welcomed the Pensions Bill passing its second parliamentary reading stating that it “will create a simpler, fairer system that encourages retirement saving”, but declared his disappointment that the government is pushing ahead with legislation on small pots.

“We agree it should be easier for people to combine pension pots and we recognise the increase in pots that will arise from automatic enrolment. However, the current proposals could result in members’ pots being transferred from good pensions into bad ones. They are also likely to result in considerable costs for pension schemes and employers.”

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