Government should come clean over state pension 'triple guarantee'

NPC 23 June 2010

Britain's biggest pensioner organisation, the National Pensioners Convention (NPC) is calling on the government to clarify the extent of its state pension 'triple guarantee' announced in yesterday's emergency Budget, for fear that it may not be as generous as first appeared.

From April 2011, the basic state pension will rise by the higher of either earnings, prices or 2.5% - but whilst there has been an assumption that the measure of prices will be the Retail Price Index (RPI), Treasury papers reveal that after next year, the guarantee could instead be based on the lower Consumer Price Index (CPI). Currently this is running at 3.4% - considerably lower than the RPI figure of 5.1%.

In the papers released yesterday it states:

The Government will uprate the basic State Pension by a triple guarantee of the highest of earnings, prices or 2.5 per cent from April 2011. The CPI will be used as the measure of prices, consistent with the Government's decision to index all benefits and tax credits by the CPI, although the basic State Pension will increase by at least the equivalent of the Retail Prices Index (RPI) in April 2011 to ensure its value is at least as generous as under previous uprating rules.

Dot Gibson, NPC general secretary said: "We are hoping that this is not a case of smoke and mirrors from the Chancellor - by announcing this 'triple guarantee' amid a fanfare of generosity only to find that it's pretty short-lived. The state pension is already one of the least adequate in Europe and even with the 'triple guarantee' in place it will take decades before it has any real impact on tackling pensioner poverty. The 'triple guarantee' was supposed to soften the blow felt by pensioners as a result of yesterday's Budgets, but now it seems that we've been dealt a double whammy."