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Pensions: Index Linking

Volume 460: debated on Wednesday 9 May 2007

To ask the Secretary of State for Work and Pensions what his estimate is of what the cost to the Government would have been in each year had pensions been linked to earnings rather than prices since 1997. (132731)

The estimates are in the following table.

Basic state pension cost (£ billion)

1998

0.1

1999

0.5

2000

1.3

2001

1.6

2002

2.4

2003

2.7

2004

2.8

2005

2.9

2006

3.4

2007

3.8

Note: Figures are net in cash terms, are rounded to the nearest million and include UK and overseas pensions Source: DWP modelling.

The earnings link will be restored to the basic state pension. The objective is that this will be done, subject to affordability and the fiscal position, in 2012 but in any event at the latest by the end of the next Parliament.

By 2050 the amount of the basic state pension will roughly double in value compared with current policies.