I can’t believe the positive comments about the marvellous reinstatement of state pensions to earnings.
The Budget states that the basic state pension – note that word “basic” – will increase in relation to either earnings, prices or 2.5 per cent, whichever is the greater.
In a period of pay freezes which is likely to continue for at least a couple of years we are not likely to see much gain there.
Prices are now to be based on the CPI (Consumer Price Index) as opposed to the previously used RPI which was actually running at a negative figure last September when the pension increases were calculated.
It was only then the government granted a 2.5 per cent increase on the basic (that word again) pension. Needless to say, the CPI will produce a lower figure each year, so don’t expect 2.5 per cent to be achieved there either.
Thus pensions will increase by 2.5 per cent – sorry, I forgot that word basic.
The basic pension will increase by 2.5 per cent but the other elements of the state pension will remain frozen, so really no one will get as much as 2.5 per cent.
Study the small print.
Barrie Wellman, Havelock Road, Branksome
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