Caution urged over pensions rise
Published 26/10/2010 | 04:07
Pensions experts have urged caution after it was announced that the state pension could be increased by more than £40 a week for all pensioners under proposals to abolish means-tested benefits for the elderly.
In another nod to the so-called “grey vote”, ministers are drawing up plans to introduce the new flat-rate payment, which would replace the complicated and expensive system of pension top-ups that exists presently.
But personal finance experts last night warned that not enough details of the scheme have been announced to guarantee that no-one will lose out.
The scheme is also not believed to have been finally agreed with the Treasury, which has vetoed previous pension reform plans on costs grounds.
At present, the basic state pension is £97.65 for a single person and £156.15 for a couple.
Under the new proposals, due to be published in full later this year, all pensioners would receive a weekly payment of around £140.
Ministers suggested that the extra money to pay for the increase could be found by reducing the bureaucracy currently involved in means-testing pensions.
But one expert source said: “The spin the Government are putting on this is that they can pay for the £140 by cutting out the £6 billion cost of means-testing. But if it was that simple this would have been done a long time ago.
“The winners will be mainly women and carers, while the losers will be those who have contributed to the State Second Pension.
“They could end up getting less money under the plans.”