Pensions Bill

Yes, we have looked at that issue carefully and it has been a major concern for us. The proposals in the Bill and the other reforms that we are taking forward will be of some assistance. Clause 5 will restore the earnings link and allow for that to happen from 2012 or, in any event, by the end of the next Parliament. As a result, by 2050 the basic state pension will be worth twice as much in real terms as it is today. The clause also places in primary legislation the Government’s pledge to uprate the standard minimum guarantee element of pension credit by earnings. The Government are committed to reducing the extent of means-testing in the future, thus ensuring that pension credit continues to be targeted at people who would otherwise have been poor in retirement, or those who have only small and modest savings. The clause provides the means of securing that important outcome. As a result, by 2050 less than a third of pensioners will be eligible for pension credit, with only about 6 per cent. receiving the guarantee credit alone, and it may be possible for small savings to be taken as a lump sum through the process of trivial commutation. In the vast majority of cases, those receiving pension credit will be continue to be rewarded for saving for their retirement.