Pensioners: Support for old 'still lowest in Western world'
Wednesday 23 June 2010
The restoration of the link between earnings and increases in the state pension will start in 2011, sooner than was planned under the last government. What is markedly different is the putting in place of what Chancellor George Osborne called a "triple guarantee", meaning that the state pension will rise in line with earnings, prices or 2.5 per cent – whichever is the greater.
"This still leaves the basic state pension as the lowest in the developed world but will mean in future it will rise faster," said Ros Altmann, a former Government adviser on pensions.
The pensions credit will rise by the same amount each year as the basic state pension but this will mean that the gap between the two will not grow, which, as Ms Altmann points out, will have an effect, long term, on the number of claimants.
"[The] Pension Credit will gradually become less generous though, as it will only be increased by the same cash rise as the full basic state pension. For example, if the basic state pension rises by £3 a week, or 3.1 per cent next year, the same cash increase would increase the Pension Credit by £3 a week, which is an increase of just 2.3 per cent.
"If these changes were repeated over many years, eventually the state pension would rise to the Pension Credit level, " Ms Altmann said.
"As the Pension Credit becomes relatively less generous and state pension becomes more generous, this will reduce the number of pensioners eligible for means testing."
At the same time, the Chancellor pledged to accelerate the move to an older state pension age of 66 and to review the default retirement age.
Pensioners may be most relieved about what was not in the Budget rather than what actually was. The winter fuel allowance, widely reported to have been under threat, will stay, as will free bus travel for elderly people.
Those approaching retirement may be pleased that the Government says it will carry through its pledge to end the practice of forcing people to use their pension pot to buy as annuity – a guaranteed income for life by age 75. From April 2011, savers will be free to leave their money in their pensions for longer.
For those looking ahead to saving for their retirement, there was little light thrown on the future shape of UK pensions. The long-trailed NEST national workplace saving scheme, due to come into place from 2012, is still dogged by uncertainty over the size of contributions and whether or not employees will be auto-enrolled into the scheme.
Likewise, there was no indication on how the Government plans to increase the flexibility of personal pension schemes, which have been dogged by underperformance, complexity and mis-selling in recent years. The savings gateway, which was designed to supplement the savings of low income groups and was set to roll out around the country in July, has been shelved.
- 1 Asteroid narrowly scrapes past Earth: how to watch the closest space rock for decades as it flies by
- 2 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 3 The enemy within: People who hear voices in their heads are being encouraged to talk back
- 4 British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
- 5 Watch Richard Dawkins read his own hatemail: 'I hope you do get sodomised by satanic monkeys in hell'
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
Islamic history is full of free thinkers - but recent attempts to suppress critical thought are verging on the absurd
Leaked documents show Ukip leaders approve NHS privatisation once it becomes more 'acceptable to the electorate'
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
Day In a Page
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village