Looks at the current policy on uprating the State Pension and Pension CreditJump to full report >>
The current State Pension has different elements. The basic State Pension (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) is to be introduced for future pensioners from 6 April 2016. The starting rate - £155.65pw in 2016/17 – is provided for in the draft State Pension (Amendment) Regulations 2016. The legislation requires the nSP to be uprated at least in line with earnings (Pensions Act 2014, Schedule 12 (19)). The Government has indicated that it intends to apply the triple lock (DWP 2015, p10).
For current pensioners, 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 those 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. The other elements of Pension Credit can be uprated by such a percentage as the Secretary of State thinks fit having regard to the national economic situation and any other matters which he considers relevant (Social Security Administration Act 1992, s150 (1) (l) and (2)).
In recent years, the Savings Credit threshold has been increased and the maximum reduced, both of which measures have the effect of reducing the amount payable. In March 2015, the Government said that taking into account other changes such as the increase in the BSP by the triple lock, it was “unlikely that any Pension Credit customer should be worse off, in cash terms, as a result of the uprating decisions made over the last three years” (PQ226249 9 March 2015). The Savings Credit element of Pension Credit is to be removed for future pensioners from 6 April 2016 as part of the Government’s State Pension reforms.
The House of Commons debated the SI setting the rates for 2016/17 - Social Security Benefits Up-rating Order 2016 and that setting the starting rate for the nSP -State Pension (Amendment) Regulations 2016 on Monday 8 February 2016.
Other Library Briefing Papers of possible interest include:
- CBP-07410 2016 Benefits Uprating (November 2015)
- SN-07414 The new State Pension – transitional questions (January 2016)
- SN-01457 Frozen overseas pensions (January 2016)
- SN-02117 Pension Uprating – background (July 2010).
Commons Briefing papers SN05649
Author: Djuna Thurley