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State Retirement Pensions

Volume 477: debated on Monday 16 June 2008

To ask the Secretary of State for Work and Pensions if he will estimate the cost which would arise from (a) increasing the state pension by (i) 10 per cent., (ii) 25 per cent., by 50 per cent. and (iv) 100 per cent. and (b) setting the state pension at the average level of other EU member states. (205202)

The net additional cost of increasing the basic state pension by 10 per cent, 25 per cent, 50 per cent or 100 per cent. instead of the current baseline assumption of RPI or 2.5 per cent, whichever is the highest, in the year 2009-10 is given in the following table.

Uprating the basic state pension in 2009-10 by: per cent.

Net additional annual cost in 2009-10 (£ billion, 2008-09 prices)









Notes: 1. Estimates are presented in net terms reflecting that the estimated savings from reduced income related benefit payments (pension credit, housing benefit and council tax benefit) have been deducted. The proportions of additional expenditure saved through reduced income related benefit payments have been estimated using the Department's policy simulation model and are assumed to remain constant over time. 2. In the baseline costing for the financial year 2009/10 Treasury Economic assumptions consistent with Budget 2008 have been used to model basic State Pension uprating. 3.Estimates are in 2008-09 prices and have been rounded to the nearest £100 million. Source: DWP modelling

Data are not available to make a direct comparison of the UK state pension level with that of the average level of other EU member states. The level of state pensions in each country reflects differences in factors, such as Government policy choices and the cost of living, making cross-country comparisons difficult. However, Eurostat data indicate that taking into account all sources of income, UK pensioners have the fifth highest median net income in the EU.

To ask the Secretary of State for Work and Pensions what the change in the average state pension was in real terms in each year since 1979. (208343)

Details of the real value of the basic state pension in each year from 1979 to 2006 can be found in “The Abstract of Statistics for Benefits, National Insurance Contributions, and Indices of Prices and Earnings” (2006), produced by the Department for Work and Pensions.

The 2007 update of this publication is due for release later this summer.

To ask the Secretary of State for Work and Pensions how much the average state pension would be today if the link between earnings and pension levels had been continuously maintained. (208344)

Average weekly payments of the state pension were estimated at approximately £97 in 2007-08; this amount is comprised of both the basic state pension and additional state pension. Had the basic state pension remained linked to earnings since 1980, the average state pension is estimated to have been around £140 a week in 2007-08.

During the next Parliament, we will re-link the uprating of the basic state pension to average earnings. Our objective, subject to affordability and the fiscal position, is to do this in 2012, but in any event by the end of the next Parliament at the latest. We will make a statement on the precise date at the beginning of the next Parliament.

To 2008-09, the Government will be spending around £8.3 billion more on pensioners due to tax and benefit changes since 1997, than just restoring an earnings link from 1997 would have delivered. Pensioners are on average, £19 a week better off in 2008-09 as a result of Government measures since 1997, than if an earnings link had been applied to the basic state pension from 1997. The poorest third of pensioners are around £33 a week better off.


1. The amount estimated is for GB pensioners as at September 2007.

2. The average earnings figures used to calculate the pension uprating in each year were taken from the New Earnings Survey prior to 1998 and from the Annual Survey of Hours and Earnings since 1998.

3. The earnings-related element of the state pension—the state second pension (S2P), is uprated by earnings in accrual. In 2005-06, around 26 million individuals were accruing some entitlement to S2P.