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:

Whether the rates of poverty among people aged over 80 are likely to be affected by the reduction in limited price indexation as outlined in the Pensions Bill.

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. As those affected will already have additional provision for their retirement from their occupational pensions, it is unlikely the measure will have any measurable impact on people aged over 80. Moreover, other measures in the Bill, such as the Pension Protection Fund, should help all pensioners by offering protection against the more significant losses of retirement income that may result from employer insolvency.

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