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Pensions

House of Lords written question – answered on 6th November 2009.

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Photo of Lord Laird Lord Laird UUP

To ask Her Majesty's Government what benefits and public sector pension rates are normally governed by September's RPI figure; what is the estimated cost in 2010—11 of increasing old age pensions by 2.5 per cent and not taking account of the deflationary figure of -1.4 per cent in September 2009's RPI rate; and what rate increases or decreases will apply to other benefits and public sector pensions governed by September's RPI figure.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Parliamentary Under-Secretary (also in the Department for Communities and Local Government), Department for Communities and Local Government, Parliamentary Under-Secretary (also in the Department for Communities and Local Government), Department for Work and Pensions, Parliamentary Under-Secretary (Department for Communities and Local Government) (also in Department for Work and Pensions), Parliamentary Under-Secretary (Department for Work and Pensions) (also in the Department for Communities and Local Government)

I refer the noble Lord to my Answers of 5 May 2009 (WA 105) to Parliamentary Question HL2814 and of 1 June 2009 (WA 08) to Parliamentary Question HL3626.

The benefits and pensions ordinarily uprated by September's retail price index are:

basic state pension, and rates of widows and bereavement benefits linked to the rate of basic state pension;additional pensions, also known as SERPS or S2P;increments: for the deferment of state pension and guaranteed minimum pensions;attendance allowance;carer's allowance;disability living allowance;maternity allowance;industrial injuries disablement benefit;benefits under the Workmen's Compensation Act and the Pneumoconiosis, Byssinosis, and Miscellaneous Diseases Scheme;industrial death benefit;widows/bereavement benefits rates are linked to the basic state pension rate; andstatutory payments for maternity, paternity, adoption and sick pay.

Income-related benefits, such as income support, are usually uprated in line with the September Rossi index, which is retail price index excluding rent, mortgage interest payments, council tax and depreciation costs. Since April 2009, incapacity benefit has been uprated in line with the September Rossi index.

Public sector pensions are increased in accordance with Section 59 of the Social Security Pensions Act, 1975 and I refer the noble Lord to my noble friend Lord Patel of Bradford's Answer of 3 March 2009 (WA141) to Parliamentary Questions HL918 and HL1108.

In the 2009 Budget, the Chancellor reaffirmed the Government's commitment to increasing basic state pension, and by extension, widow's benefit and bereavement benefit, in April 2010 by at least 2.5 per cent even if, as expected, retail price inflation was below zero. Uprating basic state pension by 2.5 per cent in April 2010 will deliver an increase worth around £1 billion to pensioners over the course of the year. The current legislation does not allow for benefits and pensions to be reduced in the event of negative inflation so no calculations on benefit and pension reductions have been made.

The Government will inform Parliament of proposed benefit levels and tax thresholds for 2010-11 at the Pre-Budget Report.

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