New proposals calling for a minimum weekly State Pension payment of £380 for all men and women over the age of 60 has been rejected by the Department for Work and Pensions (DWP). An online petition, created by Michael Thompson, received more than 1110,000 signatures of support from people across the UK and was debated by MPs in Parliament last week.
The petition also called on the UK Government to lower the State Pension age from 66 to 60. It argued that current payments are “far too low” but suggested that by increasing the Basic State Pension weekly rate from £141.85 to £380 - equivalent to £19,760 per year - to everyone aged 60 or over, this “should lift thousands out of poverty” while giving older people “more spending power and help grow the economy”.
Pensions Minister, Laura Trott listened to contributions from MPs including David Linden (SNP), Marsha De Cordova (Labour), Beth Winter (Labour) and Matt Rodda (Labour), before saying that the UK Government “disagrees with the petition’s proposed approach” and setting out the reasons why.
Ms Trott addressed both proposed points in the petition separately, providing clarity and evidence on why they could not be realistic considerations without impacting on the larger UK population, especially taxpayers.
Proposed £380 per week for all pensioners over 60
The proposed payment of £380 per week would see State Pension on par with the National Living Wage, something that Ms Trott explained was not practical as the two are “very different provisions, with distinct purposes”.
She said: “The National Living Wage aims to protect low-income workers and to provide an incentive to work, by ensuring that workers benefit from being employed. However, most pensioners have already left the labour market.
“Comparisons made in the e-petition between headline State Pension amounts and the National Living Wage do not consider the full package of state measures available to support people in retirement or the fact that pensioners do not pay National Insurance or into a pension scheme through automatic enrolment.”
The DWP Minister also explained how a £380 per week State Pension for the UK’s older population would be “unaffordable” demonstrating that it would mean an annual cost of up to £251 billion if it was applied for 2022/23 - compared to the £110 billion the UK Government is currently forecast to spend on the State Pension this financial year.
Ms Trott also highlighted how auto-enrolment is playing a major part in retirement for people on the New State Pension as they will not only have the DWP entitlement but also workplace pensions to boost their later life income.
She said: “In the UK we have a system of state and private pensions, which jointly provide an income for people in retirement. Most people will have a private or occupational pension on top of the State Pension.
“In the 2021 financial year, the average net income of all pensioners was £361 per week, after housing costs. Crucially, the Government also provides around £67 billion each year in tax relief to boost private retirement savings. It is important to consider all aspects of Government support for retirement, rather than solely the State Pension amount.”
Proposal to lower retirement age to 60
Regarding the petition’s proposal to lower the State Pension age from 66 to 60, Ms Trott said: “The Government have no plans to reverse changes to the State Pension age.
“Previous reforms have focused on maintaining the right balance between affordability, the sustainability of the State Pension and fairness between generations.”
She explained how changes to State Pension age were made through a series of Acts, and by successive Governments, from 1995 onwards.
“Those reforms followed public consultations and extensive debates in both Houses of Parliament,” Ms Trott explained.
She added: “The State Pension is funded through the National Insurance and tax contributions of the current working-age population. Like increasing the State Pension, reducing the State Pension age to 60 would massively increase the tax burden on the current working-age population and carry significant costs.”
It’s worth noting that the SNP’s David Linden agreed with the DWP on the proposed lowering of retirement age.
He said: “Although, for practical reasons, the Scottish National party cannot support reducing the retirement age to 60, the notion that the pension age needs to go up and up, as a simple solution to the British Government’s problems, is both cruel and unrealistic.”
He also said: “The only way to ensure our pensioners grow old with dignity is for Scotland to become an independent country, with powers to protect pensioners and ensure that they live their final days in prosperity, not poverty.”
Pension Credit
Pension Credit take-up was also mentioned by the contributing MPs and the DWP Minister welcomed taking a collaborative approach to ensure the estimated 850,000 older people who are eligible for the annual income boost worth over £3,500, but not claiming it, are aware of the benefit and encouraged to claim.
Ms Trott confirmed earlier this week that the annual State Pension uprating letters being sent out to more than 11 million older people will also include Pension Credit information to encourage take-up of the benefit which can be a passport to additional help with housing, heating and Council Tax. An additional £1.8m has also been approved for marketing activity until the end of this financial year, on April 5 to help promote take-up across the UK.
Find out more about claiming Pension Credit on GOV.UK here.
You can watch the hour-long debate on the Parliament TV YouTube channel here.
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