Government accused over 'shabby' pensions move

The Government was today accused of treating pensioners in an "underhand and shabby" manner after it was disclosed that its promised 2.5 per cent rise did not apply to all elements of the state pension.

Chancellor Alistair Darling's commitment to increase the basic state pension was one of the few bright spots in his Pre-Budget Report on Wednesday, as he set out his plans to tackle Britain's ballooning £178 billion deficit.

However the BBC's Money Box programme reported that the uprating would not apply to extras, such as the State Earnings Related Pension (Serps), which will remain frozen.

Pensions Minister Angela Eagle was quoted by the programme as saying that the move would prevent "confusion and unfairness" because Serps affects company pension payments.

At the same time, the small earnings-related supplement called graduated pension which is paid to more than 10 million people, and the additional pension of £57.05 paid to 41,000 men who have wives under 60 were also said to have been held at this year's levels.

And an increase in the extra pension of £7 a week paid to 1.2 million over 60s who have delayed their retirement was reported to be under threat.

The freeze is estimated to save the Treasury £350 million in 2010-11.

The move was bitterly condemned by the National Pensioners Convention general secretary, Dot Gibson.

"Pensioners will be absolutely stunned that only part of their state pension is going to rise next year. This is unprecedented and the fact that the Chancellor never made this clear in his pre-budget statement looks underhand and shabby," she said.

"Over 2.5 million older people already live in poverty and millions more are struggling to meet the rising costs of living. This decision will certainly push more into financial hardship.

"We need a state pension that takes older people out of poverty - not one that pushes them further into it. It's simply unfair that the least able are being asked to shoulder the biggest burden of the recession."

A spokesman for the Department for Work and Pensions said: "The Chancellor has announced this week a 2.5% increase for the basic state pension. A further statement to Parliament on Monday will set out all other benefit upratings."