Millions of Pensions Excluded From Pre-Budget Rise
by Ritchie Mehta (14 December 2009)
Chancellor Alistair Darling announced that the basic state pension would rise by 2.5 per cent in April, but that other pensions, including State Earnings Related Pensions (Serps), will be frozen at current levels.
Around 11 million pensioners in Britain currently receive the basic state pension, however 10 million of those get some form of additional pension on top of this, meaning that the rise will only apply to part of the payout they currently receive.
While the government has yet to release a planned statement announcing exactly which other additional pensions will remain frozen, the list is expected to include the small earnings-related supplement called "graduated pension", the additional pension of £57.05 paid to 41,000 men who have wives under 60 and the supplement of £7 a week paid to 1.2 million over 60s who have delayed their retirement.
By limiting the increase to the basic state pensions, the Treasury is expected to save an estimated £350 million in 2010/11. Clarifying why Serps were being omitted from the rise, Pensions Minister Angela Eagle explained it was to prevent "confusion and unfairness" because it affects company pension payments.
While opposition to the move have strongly criticised the move as "underhand" and "shabby", putting the 2.5 million elderly people already living in poverty in the UK into further financial difficulty, while likely further expanding this number, a spokesperson for the Department of Work and Pensions has claimed that the UK's 11 million pensioners will be seeing a real increase in their money.
Either way, in the current economic climate many people approaching or entering retirement are already aware of the need for more than the state pension can provide to sustain the lifestyle they have become accustomed to.