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State Retirement Pensions

Volume 504: debated on Monday 18 January 2010

To ask the Secretary of State for Work and Pensions if she will estimate the (a) gross and (b) net additional spend on the basic state pension if it were increased by the rate of increase in average earnings, the retail price index or 2.5 per cent., whichever was the highest, in each of the next five years. (306375)

[holding answer 14 December 2009]: The information requested is given in the following table:

Additional basic state pension spend from uprating the basic state pension by the higher of earnings, the retail prices index or the 2.5 per cent. underpin, £ billion 2009-10 price terms, net of income related benefits, UK and overseas

Additional spend

2010-11

0.0

2011-12

0.0

2012-13

0.3

2013-14

0.3

2014-15

0.3

Notes:

1. Baseline projections of expenditure on pensioner benefits used for these costings assume that the basic state pension is increased by earnings from 2012. Prior to 2012, projections assume that the basic state pension is uprated by the greater of RPI or 2.5 per cent.

2. Estimates given are net to baseline, they do not include the gross additional basic state pension spend from implementing the 2007 Pensions Act reforms to the basic state pension from April 2010.

3. 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.

4. In the financial years up to and including 2014-15 Treasury economic assumptions consistent with table B1 of the pre-Budget report 2009 have been used in the above modelling.

5. The costs and savings estimates provided are based on future projections of earnings and price inflation—which are inherently uncertain and subject to change particularly in light of the current economic uncertainty. This is underlined by the fact that the estimated cost of earnings uprating has changed from estimates based on Treasury economic assumptions consistent with Table C1 of the Budget 2009.

6. Estimates are in 2009-10 prices, have been rounded to the nearest £100 million and include UK and overseas claimants.

Source:

DWP calculations