In an interview with The Times, Adair Turner, chairman of the Pensions Commission, risked infuriating pensioners by saying that there were people retiring today who had “an annual income, longevity improvements and spousal benefits that no one has ever enjoyed before”.

His statement came just days after Stephen Timms, the Pensions Minister, was booed at the National Pensioners’ Convention for telling the audience that they were better off than “any pensioner group in our history”.

Yesterday, however, Mr Turner said that Mr Timms’s claim “was probably true for the majority of people so long as people claim their means-tested rights”.

Tony Blair asked the commission to look at ways of reforming the pensions system. Its first report, out last October, warned that Britons had been “living in a fool’s paradise” over pensions.

The commission, which is due to release its second report by November 30, will host a summit of key “stakeholders”, including the Work and Pensions Secretary David Blunkett, next week, at which it will test some of its main ideas.

Mr Turner said that he did not expect the summit to produce consensus. “We’re not going to produce a summary at the end of the day or reveal our front-runners,” he said.

But he added that the commission was already debating the issues, using its own models to prove arguments about the relationship between public expenditure, the generosity of the basic state pension, means-testing, retirement ages and tax incentives Within two months the commission will decide whether to give specific instructions on tax relief, but Mr Turner said that its final report would not necessarily be definitive on all pensions issues.

“Part of our job may be to face society with the choice that changes have to be in this area and then the rest is a series of political trade-offs,” he said.

He is, however, certain that the choices it offers will be radical. “We’re not going to simply recommend tinkering with the present system,” Mr Turner said.

The commission is convinced that ministers remain “open-minded”, he added.

“A lot of things have been said (by ministers) but a lot of them are contradictory, which shows that there’s no definite plan.”

'Existing pension system is not fit'

ADAIR TURNER on . . .

UK pensions
“The existing system, public and private combined, is not fit for purpose”

State benefits
“The UK state pension system is one of the least generous systems in the developed world”

On retirement ages
“The idea of a separate retirement age for graduates and non-graduates is unreasonable, unworkable and just plain silly. The Pensions Commission has not spent one second considering it”

On the need for change
“The aim of successive UK governments to shift the balance of pension provision from the state to the private sector is simply not being achieved and will not be achieved on unchanged policies”

On public sector pensions
“Significant numbers of people in public sector schemes and in still open private sector DB (defined benefit) schemes are enjoying pension promises of unintended and arguably unaffordable generosity”

On the state second pension
“Complex and indeed for many people impenetrable”

On improving mortality
“Uncertainties about future life expectancy are greater than recognised. Public policy and pension fund management should be based on the assumption that male life expectancy at 65 in 2050 could be anywhere between 20 and 29 years”

On getting through the crisis
“Our further analysis of the current position and trends confirms that laissez faire is an unattractive option, with many people heading towards pensions they will consider inadequate”

On stakeholder pensions
“There is little evidence of a net increase in pension contributions into personal and group personal pensions as a result of the introduction of stakeholder pensions”

On means testing
“Means testing within the state system both increases the complexity and reduces, and in some cases reverses, the incentives to save via pensions which the tax system creates”

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