Pensions Bill: Limited Price Indexation

House of Lords written question – answered on 4th May 2004.

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Photo of Lord Morris of Manchester Lord Morris of Manchester Labour

asked Her Majesty's Government:

What assessments have been made, in the context of the Pensions Bill, of the impact that reducing limited price indexation will have on the number of pensioners eligible for means-tested benefits if inflation exceeds 2.5 per cent.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

We estimate that, as a result of reducing the limited price indexation cap from 5 per cent to 2.5 per cent, the average pensioner will face a reduction in their total income over retirement of less than 2 per cent. We do not therefore expect a significant increase in the number of pensioners eligible for income-related benefits.

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