THOUSANDS of pensioners in Kent to benefit from Lib Dem manifesto pledge

THOUSANDS of pensioners in Kent to benefit from Lib Dem manifesto pledge

PENSIONERS would be guaranteed to earn at least an extra £790 per year by the end of the next parliament under Liberal Democrat manifesto plans, Pensions Minister Steve Webb announced today.

These changes mean the state pension will be worth at least £131-a-week by 2020, up from just £97.65 four years ago – an important help to Kent’s 262,000 pensioners.

Thanks to the Liberal Democrats’ triple lock guarantee, the basic state pension has risen in each year of the last parliament by whichever is the higher of earnings, prices or 2.5%. The triple lock was a key demand from the Liberal Democrats in Coalition negotiations.

This means the state pension is £440 higher per year in 2014-15 than if it had increased in line with earnings from the start of this Parliament, and £800 a year more in total.

Only the Liberal Democrats are committed to write this guarantee into law, giving pensioners more certainty that their pension will continue to rise in future.

Announcing the plan, Pensions Minister Steve Webb said:

“A decent income in retirement for pensioners is central to the Liberal Democrat vision of a fair society.

“For decades, successive Labour and Conservative governments allowed the state pension to decline after Mrs. Thatcher broke the ‘earnings link’ in 1980. Our manifesto promise of a ‘triple lock’ has been implemented every year since 2010 and means that the state pension is already a higher share of the national average wage than at any time since the early 1990s.

“But if we are serious about having a decent state pension we need to go further. That is why the Liberal Democrats will guarantee in law that in each year pensions will rise by the highest of wages, prices or 2.5%.”

The Liberal Democrat plans are in stark contrast to the Labour years, which on one occasion saw Gordon Brown increase the state pension by just 75p-a-week.

The triple lock guarantee would ensure an increase in the value of the state pension of at least £790 per year by the end of the next Parliament.

Pensioners who receive the full state pension would get at least £6,800 in 2020.

This is the minimum increase that would be delivered. Based on current assumptions, the actual level of the state pension is likely to be even higher, at £139.95 per week (or £7,277 per year).

ENDS

 

Notes to editors

 

The state pension is set each October. Assuming that the state pension is increased rises by 2.5% this year, it would mean that from April 2015 the state pension would be worth £115.93 per week. Under the Liberal Democrats’ plans the pension would continue to rise at least 2.5% every year of the next parliament- worth over £2,000 to someone on the full state pension.

 

Effective From Weekly value after 2.5% increase Annual value of state pension Increase from 2015
Apr-15 115.93 6028.36
Apr-16 118.83 6179.07 150.71
Apr-17 121.80 6333.55 305.19
Apr-18 124.84 6491.88 463.52
Apr-19 127.97 6654.18 625.82
Apr-20 131.16 6820.54 792.18

 

If earnings or prices were to increase by more than 2.5%, the state pension would instead increase by that amount.

 

The triple lock will also protect the value of the single tier state pension, which is to be introduced for new pensioners in 2016.

At the last election the Liberal Democrats promised to introduce a triple lock, which we have done, the table below shows the increases each year since the party entered office.

 

Effective from £ / week £ / year Increase % increase Total increase / week Total / year
Apr-14 £113.10 £5,881.20

£2.95

2.7%

£15.45

£803.40

Apr-13 £110.15 £5,727.80

£2.70

2.5%

£12.50

£650.00

Apr-12 £107.45 £5,587.40

£5.30

5.2%

£9.80

£509.60

Apr-11 £102.15 £5,311.80

£4.50

4.6%

£4.50

£234.00

Apr-10 £97.65 £5,077.80

£2.40

2.5%

 

 

 

There are good reasons to have proper indexation of the state pension:

 

  • most people in retirement have a mixture of state and private pensions;  increasingly their private pensions have no inflation protection built in;  given that people are going to be spending decades in retirement, the risk is that pensioners will see a fall in their standard of living through every year of that retirement unless we have proper indexation of the state pension.
  • at the moment, the proposed single tier pension is only just higher than the level of the means-tested floor for pensioners;  to make it clear that those who have worked and contributed all their lives benefit from doing so, we need to increase the gap between the pension and the means-test – the triple lock does this progressively in an affordable way.
  • with rising state pension ages it is affordable to have a properly indexed state pension;  so people may be working a bit longer, but when you get the pension it should be worth having;  all our long-term costings of single tier show that even with triple lock for the next 50 years, we have still made the system more affordable than the system we inherited.

 

Published and promoted by Tim Gordon on behalf of the Liberal Democrats, both at LDHQ, 8-10 Great George Street, London, SW1P 3AE.

 

 

About Alan Bullion

Alan Bullion is Lib Dem Parliamentary Spokesman for Sevenoaks and Swanley
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