The poorest will get the smallest pension increase
The Department for Work and Pensions (DWP) has today published proposed benefit and pension rates for the 2018/19 tax year.
It shows that the state pension (flat rate) for new pensioners will rise by £4.80 a week – from £159.55 to £164.35 a week in April 2018. This is an increase of 3%.
But the pension credit rate (income-related benefit) will rise by just £3.65 – from £159.35 to £163 a week. This is an increase of 2.3%.
Since 2010, the state pension has risen annually by the highest of inflation, earnings growth or 2.5% under the ‘triple lock’ guarantee. It’s based on the September CPI figure which came in at 3% and the triple lock is guaranteed until 2020.
However, when it comes to pension credit, the only legal requirement is that it increases in line with the growth in average earnings.
Former pensions minister and current director of policy at Royal London, Steve Webb, said in previous years, the governments has found extra money within the benefits system to make sure the poorest pensioners got the same rise as their better-off counterparts, but this year this has not been done.
Webb said: “It is surprising that the government has decided to give the poorest pensioners the smallest increase. For those on pension credit, the rise is below the rate of inflation which will create a squeeze on the living standards of the poorest pensioners. By contrast, better off pensioners will get a full inflation-linked increase. For many years pensioner poverty has been falling and it would be worrying if that progress were to be reversed because of decisions like this.”