Report reveals state pension freeze

14/12/2009

The 2.5 per cent increase to the state pension announced in last week's Pre-Budget Report is to be applied to the "basic" component of the pension only.

A report from the BBC's Moneybox show revealed that "extra" parts of the state support, including the State Earnings Related Pension (Serps) and graduated pension are to see no increase from April 2010.

However, the government pointed out that pensioners would still see an increase in their spending power due to the change, as inflation rates have recently gone below zero.

Pensions minister Angela Eagle also said that the decision to freeze Serps was designed to avoid "confusion" among pensioners.

This is because Serps are linked to private pensions - and many workplace schemes have themselves been frozen this year due to the recession.

"During these tough times it's vital our support is targeted at the state pension which helps all pensioners, as well as carers and disability benefits where it's going to make the most difference," a government spokesperson added.

Other measures set out in the Pre-Budget Report include a decision to raise National Insurance for employees earning over £20,000 a year by 0.5 per cent from April 2011.

Tags; Income Worries and Debt, Retirement Money Problems,

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