House of Commons Library

State Pension Uprating

Published Wednesday, February 10, 2016

Looks at the current policy on uprating the State Pension and Pension Credit

Jump 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:

  • The statutory requirement is to increase the basic State Pension (BSP) at least in line with earnings (Social Security Administration Act 1992, s150A). However, the Government is committed to increasing it according to the “triple lock” – the highest of earnings, prices or 2.5 per cent (HM Treasury, Summer Budget 2015, para 1.139). In April 2016, the BSP will be uprated in line with earnings. i.e; by 2.9% or £3.35 pw from £115.95 to £119.30.
  • The statutory requirement is to increase the additional State Pension (ASP) at least in line with prices (Social Security Administration Act 1992, s150 (1)). Since 2011, the measure of prices used has been the Consumer Prices Index (CPI). As CPI inflation was measured at -0.1% in September 2015, the additional State Pension (and other CPI-linked benefits) will remain largely unchanged for the year 2016/17.

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

Topic: Pensions

Share this page

Stay up to date

  • Subscribe to RSS feed Subscribe to Email alerts Commons Briefing papers

House of Commons Library

The House of Commons Library provides research, analysis and information services for MPs and their staff.