PENSIONSANDSAVINGS.COM

It is only right to properly protect State Pensions in the middle of a cost of living crisis, especially after the past year’s real terms cuts. 

State Pensions rose just 3.1% after earnings had increased over 8% as Government broke triple lock just when inflation soared past 10%. 

Millions of pensioners must survive on just State Pension – around £10,000 a year or only £8,000 for older pensioners – lowest in developed world. 

Means-testing of State Pensions is not the answer – we saw Pension Credit undermined private provision and raised pensioner poverty. 

Criticism of the 10.1% inflation increase for State Pensions is disappointing: Critics suggest pensioners should not have been protected like this, especially as wages increased by less than this. Such comments ignore the reality facing millions of pensioners in this country. After being short-changed over the past year, with just a 3.1% rise while prices were rising by over 10%, pensioners have faced significant real terms cuts in their basic state income.

In the middle of a cost of living crisis, pensioners were abandoned last year: Especially as the UK state pension is the lowest in the developed world, prioritising inflation increases should have been axiomatic. Yet, the triple lock promise of protection against rising prices or earnings was broken last year.  Wages had risen by over 8% but pensioners had to manage on just 3.1%.

There are some well-off pensioners but millions are living on very low incomes: There are, of course, many pensioners who have plenty of income or other assets to supplement their state pension. Over £50billion a year is also spent on incentives for private pensions too, which are supposed to supplement the minimal state payment – that is how our national insurance welfare state has always been supposed to work.  However, today’s pensioners did not all have the chance to build private pensions when they were younger, so they are totally dependent on the national insurance social welfare arrangements, to which they have often contributed for decades.

State Pensions are very low: Even after the latest increase, the Basic State Pension, which is paid to pensioners in their seventies and beyond is only around £8,000 a year. Younger pensioners, who reached pension age since 2016, have a full new State Pension that is just over £10,000 a year. These payments are hardly a king’s ransom.

Pensioners cannot earn more in future to make up for low incomes now: Older generations have been assured, by successive Prime Ministers and opposition parties, that their small state pensions will be protected. They can’t go out and earn more, many of them, especially women, have little else to live on.

Without proper protection, promises to look after pensioners are worthless: Pensioner protection is a political choice about spending priorities. It is also a matter of morality and social responsibility. Our welfare state is based on people working and contributing to society for most of their lives, with their contributions assuring them of a basic pension – not a fortune, but enough to enable them to afford essential bills in exchange, when they are too old to continue.

Help with energy bills is welcome but food and other costs have soared too: The Government’s energy price cap may make it easier to budget for heating bills, but does not cover rising food costs, insurance, over the counter pharmacy supplies and more.

Means-testing is not the answer – it would undermine private provision for retirement: The Labour Government in the early-2000s extended pensioner means-testing significantly when it introduced Pension Credit. If people find they are penalised for having a private pension, then more and more will not bother to save. Private pension saving plummeted in the years after the extension of mass-means-testing. The State must continue to pay a basic minimum, with auto-enrolment now helping all younger people to start private pensions.

Older pensioners must not be abandoned just because some are well-off: Pensioners are still important members of our society and our welfare state contract requires them to be treated reasonably. Having broken the solemn promise to protect state pensions last year, it was only right to ensure a proper rise this time. Millions have little more than this minimum to live on. I am delighted the Government has done the right thing.