Downing St 'split' over pensions

Mr Brown and Mr Blair cannot agree on future pensions

Prime Minister Tony Blair is prepared to overrule Chancellor Gordon Brown over the future of UK pensions, the BBC's political editor has been told.

The claim came as Lord Turner's Pensions Commission published its final report recommendations.

Mr Brown is said to oppose the commission's proposals on raising pensions and on ending means-testing for pension credits.

BBC political editor Nick Robinson says the two men are "deadlocked".

Lord Turner's commission has already suggested the pensionable age should rise to 68 by the year 2050.

'Deadlocked'

Mr Blair and Mr Brown's failure to agree has led to the latest rumours of a political falling-out, says the BBC's political editor.

"Thus with the government's white paper on pensions due out next month, the two men are deadlocked.

"One of those close to the Whitehall negotiations told me 'Blair is minded to over-rule the Treasury'."

Lord Turner's Pensions Commission issued its report in February

But he added that other unnamed sources close to the Treasury said it was not possible to have a pensions policy that Mr Brown did not agree to - the chancellor still believes a means-tested scheme is preferable.

The Pensions Commission report has been prepared by Lord Turner.

The final report, which answers specific issues raised in response to the commission's recommendations, proposes the introduction of a National Pensions Saving Scheme (NPSS).

This would allow people who were not part of an employer's pension scheme to take part in an occupational pension programme. They would automatically be enrolled in a scheme when they started a new job.

They would contribute 5% of their salary, with their employer paying in an extra 3%.

'Relentless spread of means testing'

Other organisations, including the Association of British Insurers and National Association of Pension Funds, have recommended alternative schemes.

Lord Turner told BBC Radio 4's Today programme that his commission believed the link between pensions and earnings has to be restored "in some way".

If something is not done to make the state pension system more generous than it would otherwise be, "then we will have the relentless spread of means testing".

"I think the Treasury recognises and they have said to me ... that we can't go on relentlessly with the spread of means testing," he said.

"I don't think there's anybody in Britain who really, having thought about pensions, thinks we can go forward with the relentless spread of means testing."

'Lowest state pension'

He said his commission suggested that 2010 would be the time to restore the link with earnings because there is already a commitment between then and 2020 to increase women's pension age from 60 to 65.

He said he believed the Treasury had "seen health expenditure as a much bigger priority than fixing pensions".

But he insisted the UK had to reach the same sort of far-reaching reforms on pensions as countries like the US and Sweden.

In other interviews, he also argued that people who were opposed to a rise in the pension age were being "unrealistic".

David Laws, the Liberal Democrats spokesman on work and pensions, said his party supported the key conclusions of Lord Turner's report.

He said Mr Brown appeared "to be alone in thinking that Britain can persist with one of the lowest state pensions in the developed world".

"Mr Blair has made it clear that he supports the Turner report. If he cannot get his way on an issue of such importance as pensions, then his control of the government will be called into question," he added.