1st April 2011
The BBC revealed the news after it was apparently briefed in advance by ministers; therefore it uses the journalistic code ‘understood' to report the story here.
The official announcement is expected next week.
So how does this benefit investors? According to some experts it will end a system that penalises the thrifty.
Put another way, it means that it may be worthwhile to save even for those in low income groups.
Currently those savings are subject to means-testing and those who haven't saved at all still get their pension upgraded to around £130 a week for a single pensioner.
However the process of reform is likely to be a complicated one.
The new pension would be created by a merger of the basic state pension and the minimum income guarantee which tops up pensioners who have few other sources of income with means tested state benefits.
It would also probably involve collapsing in the pension credit, which allows pensioners to shield a proportion of their pension savings at roughly 60p for every pound saved, providing those savings do not exceed £10,000.
In addition, those pensioners with entitlements built up through contributing a proportion of their earnings into the state earnings related system through SERPs and its successor the State Second Pension may be brought into the system.
The Government says that accumulated entitlements will still be preserved but it remains unclear how this might happen.
If all this seems complicated, it is.
In addition, some bloggers are predicting trouble for the Government in that people already retired by 2015 will still be subject to the means-tested system.
With many of the poorest and oldest pensioners not claiming the MIG, this could prove controversial as outlined here on the Money Debate .