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State Retirement Pensions

Volume 493: debated on Monday 1 June 2009

To ask the Secretary of State for Work and Pensions (1) if he will estimate the number of pensioners who would no longer be eligible for pension credit if the basic state pension were increased in line with earnings in each of the next five years; (272659)

(2) if he will estimate the number of pensioners who would no longer be classified as being in poverty if the basic state pension were increased in line with earnings in each of the next five years.

Poverty is a complex and multidimensional issue and, as such, there are many possible measures of poverty.

It is generally accepted that low income is central to any poverty measurement. Any current projection of the number of pensioners in low income would be subject to uncertainties around future income growth, changes in the income distribution and individual changes in behaviour in response to policy changes.

While the Department does not publish projections on pensioner poverty, use of the static benefit model provides a broad indication of potential change going forward.

Analysis shows no discernible change to the number of pensioners below 60 per cent. of median household income and also no discernible change to those eligible for pension credit if the basic state pension were increased in line with earnings in each of the next five years.

We have committed to restoring the link with earnings in 2012 or by the end of the next Parliament at the latest. Earnings uprating is part of a coherent and affordable set of reforms which are intended to work in the long run as a complementary package which together mean that only around 40 per cent. of pensioner households will be entitled to one or more income related benefits by 2050 compared to around 75 per cent. in 2050 without reform.

Notes:

1. Analysis has been conducted using the Department's Policy Simulation Model.

2. In the financial years up to and including 2014-15 Treasury Economic assumptions consistent with Budget 2009 have been used to model prices and earnings uprating.

3. The model used is a static model. Estimates are therefore not a forecast of expected poverty, but a broad indication of the likely impact on poverty and pension credit caseload brought on purely from changing from price to earnings uprating, all else remaining constant.