ONE problem with this Government is that the message from the corridors of power is not always the one heard in (smoke-free) saloon bars or the high street hairdresser.

The dramatic shake-up of the state pension, proposed last week in a Department for Work and Pensions green paper, could be a classic example of this.

A fortnight ago, privatesector pensions looked a disaster zone as research from insurance firm Prudential showed that more than 35 per cent of people retiring this year will have incomes below the poverty line, set by the Joseph Rowntree Foundation at £14,400 a year.

The Pru said nearly one in five will have to survive on incomes below £10,000 a year.

Now, without a single protest march by golden oldies, Pensions Secretary Iain Duncan Smith proposes a dramatically simplified single- tier state pension from April 2015 to give couples a joint £310 a week, allowing for inflation between now and then.

The new pension will require a minimum 30 years of National Insurance contributions, with contributions required for at least seven years to get anything at all.

Clear gainers from the change will be women who stopped work to bring up children, and the self-employed. A cornerstone of the package is a guarantee of no means testing.

Hey presto! Millions nearing retirement will reckon that with a couple of boot sales each year, a pair of wellused bus passes, a heating allowance or two and cut price coupons for cheap meals and short break holidays, they can just about wing it financially until they are too old to worry.

All this thanks to the whacking 50 per cent “pay rise” from the state – the basic state pension has just risen to £102.15 a week for a single person.

In fact, the figure is not as generous as it appears: the current full state pension is topped up today by a minimum income guarantee, for those who qualify, to £132.60, while couples can collect a minimum £202.40 a week if they apply for means-tested pension credit.

About 1.5 million pensioners currently get more than £150 a week from the state, thanks to top-ups from the state earnings-related pension scheme (Serps) or the state second pension (S2P) paid for by higher National Insurance contributions.

Tom McPhail, head of pension research at financial advisors Hargreaves Lansdown, said: “What the Government is saying is that this is all you will get when you stop work, at a progressively later age.”

The revamped state pension is a clarion call to start saving, because by itself it cannot finance a comfortable old age. But few will see it like that.

Mr McPhail said: “The current system is complex, somewhat arbitrary and relies heavily on means testing to get income above the basic £102.

“This will simplify bureaucracy and, essentially, should encourage today’s workers to save for tomorrow.

‘‘If comfortable retirement requires an income which is two-thirds of your final salary – the general assumption – you can only get it from the state pension plus a big top-up from money you save yourself.”

Andrew Hagger at Money net.co.uk sees this new package as part of a carrot and stick strategy: the stick comes next year, when the Government launches auto-enrolment into private pensions plans for all workers who have failed to sign up so far, which will take until 2016 to reach everyone.