Looks at the current policy on uprating the State Pension and Pension CreditJump to full report >>
The State Pension
The State Pension for people who reached State Pension age (SPA) before 6 April 2016 has two main elements. The basic State Pension (bSP), based on a person’s National Insurance contribution record, and the additional State Pension, which is partly earnings-related. Different uprating arrangements apply to each:
A new State Pension (nSP) was introduced from 6 April 2016 for people reaching SPA from that date. Its starting rate was £155.65pw in 2016/17 (SI 2016/227).
The legislation requires the nSP to be uprated at least in line with earnings (Pensions Act 2014, Sch 12 (19)). However, the Government is committed to applying the triple lock, at least until 2020 (HC Deb 23 November 2016 c906). In April 2017, it is to rise to £159.55 pw (HCWS287, 28 November 2016).
For people who reached SPA before 6 April 2016, Pension Credit has two elements: the Guarantee Credit, which provides a minimum level of income; and the Savings Credit, which aims to provide an additional amount for people aged 65 and over who have made some provision for their retirement. The legislation requires the Standard Minimum Guarantee in Guarantee Credit to be uprated at least in line with earnings. In the years 2010/11 to 2015/16, it was increased by the cash rise in the bSP (i.e; by more than earnings) to ensure that “the benefits of the triple lock uprating” were passed on to the poorest pensioners (see for example, HM Treasury, Autumn Statement 2014, para 1.235).
The other elements of Pension Credit can be uprated by such a percentage as the Secretary of State thinks fit (Social Security Administration Act 1992, s150 (1)).
Savings Credit has been removed for people reaching State Pension age from 6 April 2016. People who reached State Pension age before that date may still be eligible. However, measures have been taken to reduce the amount payable in recent years – often through the combination of reductions in the maximum and increases in the threshold of income taken into account to calculate it (PQ226249 9 March 2015).
The rates of social security benefits – including the State Pension and Pension Credit - for 2017/18 are in the draft Social Security Benefits Uprating Order 2017.
Other relevant Library Briefing Papers include: CBP-07812 State Pension triple lock (February 2017); SN-01457 Frozen overseas pensions (May 2016); SN-07414 The new State Pension – transitional questions (August 2016).
Commons Briefing papers SN05649
Author: Djuna Thurley