Liberal Democrats promise to raise basic state pension by at least £790

Idea 'central' to the party's vision of a fair society

The Liberal Democrats are to make raising the basic state pension by at least £790 a year a key demand in any future coalition negotiations after the election.

As part of a pledge to be included in the Lib Dem manifesto, the party would promise to legislate to ensure pensions rise each year either by earnings, inflation or 2.5 per cent – whichever is greater.

At the same time, the party is considering reducing the rate of tax relief that can be claimed on private pension contributions to just 25 per cent – a move that would hit higher-rate earners but bring in £2bn in extra tax revenue.

Currently, employees can claim tax relief on contributions at the rate at which they pay tax – discriminating against low earners.

However, it would also reduce the need for further public spending cuts after 2015.

Senior Lib Dems are to meet in the next few weeks to thrash out details of key manifesto pledges.

That meeting is also expected to discuss plans to change the party's position on Europe and sign up to a binding in/out referendum on membership of the EU.

On pensions, the Lib Dems will pledge to introduce a "triple lock guarantee" into the basic state pension. This would ensure an increase of at least £790 a year by the end of the next Parliament. The state pension would be worth at least £131 a week by 2020, up from £97.65 four years ago. Pensioners who receive the full state pension would get at least £6,800 in 2020.

This is the minimum increase that would be delivered. Based on current assumptions, the actual increase is likely to be even higher, at £139.95 a week

Announcing the move, the pensions minister, Steve Webb, said the idea was "central" to the party's vision of a fair society: "For decades, successive governments allowed the state pension to decline after Mrs Thatcher broke the 'earnings link' in 1980."

Senior Lib Dems recognise they will need a "convincing" explanation of how they would reduce the structural deficit without resorting to significant cuts to benefits. They are expected to back the introduction of a mansion tax – that would raise around £2bn – and the move on pension contributions would increase this to £4bn.

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