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State Retirement Pensions

Volume 507: debated on Wednesday 17 March 2010

To ask the Secretary of State for Work and Pensions what assessment she has made of the merits of uprating earnings-related state pensions at the same rate as the basic state pension from April 2010. (318622)

The conventions on uprating state pensions are concerned with maintaining their price value. Had we applied those rules this year, when inflation as measured by the September retail Price Index was minus 1.4 per cent. pensioners would not have received a rise in their State pension.

However, we are committed to getting help to the 11 million pensioners in Great Britain, many of whom are facing difficulties in the current economic climate. We are determined that the fairest and most effective way was to apply an above inflation increase of 2.5 per cent. to the basic state pension. This will be worth around £1 billion to pensioners and will mean that on average state pension recipients will see an overall increase of 2 per cent. in their state pension. At the same time we have increased the pension credit standard minimum guarantee by £2.60 a week for single pensioners and £3.95 for couples to help the poorest pensioners.

By contrast, increasing additional State pension would have a widely variable effect on the help given to pensioners. For example, very elderly female pensioners receiving on average £5 of additional pension a week would only see an increase of a few pence each week on their state pension. However, others, typically younger male pensioners who had higher earnings, could see increases closer to around £4 a week. Increasing the basic state pension means that help is provided to more pensioners with a more even distribution.