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Pensions

Volume 717: debated on Monday 1 March 2010

Question

Asked by

To ask Her Majesty's Government whether the percentage uplift to the basic state pension will be applied to the extra portion earned by those pensioners who used the state pension deferral scheme (as set out in booklet SPD1 of April 2006). [HL2001]

The proposed 2.5 per cent increase in the rate of the basic state pension from April 2010 will not be applied to the extra state pension payable to those recipients who have deferred their state pension. The retail prices index showed that prices had fallen for the 12 months ending in September 2009. Given this evidence the Government have decided to maintain the value of increments at 2009-10 rates.

People with increments who deferred their state pension for at least one year since 2005 get a state pension that is 10.4 per cent higher than if they had not deferred. They will also benefit from the 2.5 per cent increase in the basic state pension announced at the Pre-Budget Report. We are writing to every individual in receipt of state pension with an uprating notification which clearly states that, while basic state pension is increasing by 2.5 per cent, increments and additional pension are not.

In addition, the increase in the basic state pension will be reflected in the value of increments being accrued by those who are currently deferring their state pension.

The booklet SPD1 State Pension DeferralYour Guide is being updated to reflect the change from April 2010 and the other leaflets and website are being updated to reflect the Pre-Budget Report.