5 Jan 2014

Cameron pledges to protect pension rise

In his first major pledge ahead of the 2015 general election, the prime minister appeals to older voters by promising a guaranteed rise in the state pension under a Conservative government.

David Cameron said that the Conservatives would keep the “triple lock” system if the party wins the 2015 general election.

This will ensure that the basic state pension payout will rise by whichever is highest – inflation, wages or 2.5 per cent – at least until 2020.

Old age pensioners face a post-election squeeze on benefits such as winter fuel payments, bus passes, TV licences and prescriptions as politicians seek to square continued spending restraint with an ageing population.

The prime minister did not say what would happen to these benefits under a Conservative government post-2015.

I want to do everything we can to help people who have worked hard and done the right thing – David Cameron

But Mr Cameron insisted that pensions would not be hit by continued austerity measures. “A Conservative government will offer pensioners a more secure future by pledging today that we will carry on using the triple lock after the next election to protect the basic state pension,” he said.

“We can only afford to do this because we are taking difficult decisions to cut the deficit and get spending under control as part of our long-term economic plan.

“I want to do everything we can to help people who have worked hard and done the right thing.”

An opinion poll, from research carried out by Lord Ashcroft, has found that over a third of those who voted for the Conservatives in 2010 would not support the Tories if a snap election would be held tomorrow. Read more on the findings here>

Shopping around for pensions

The basic state pension will be around £440 a year higher from April this year, than if it had been uprated in line with average earnings since 2011-12, Downing Street said.

Also on Sunday, Pensions Minister Steve Webb said that retired workers should be allowed to move their pension between schemes to get the best value for money.

“When you take out a mortgage, in a few years if rates change you can switch your mortgage,” he told the Telegraph. “But when you take out an annuity, that’s it – for life. This could easily be for a quarter of a century.

“Why shouldn’t you be able to change your annuity provider so a few years later somebody else could offer you a bigger pension?

“Why shouldn’t you be able to shop around?”

Penalising the youth?

Mr Cameron had already said that the state pension would be the only spending exempt from a new cap on overall welfare spending.

Chancellor George Osborne previously warned in his Autumn Statement that the state pension system faced collapse without action to reduce the cost to taxpayers.

His solution was to raise the pension age, so that millions of people in their 30s and 40s will have to wait until they are 68 or 69 before qualifying for a state pension.

This has sparked anger from young people who feel they are being penalised by university fees, the rising cost of housing and unemployment. Unions also protested that young people were being expected to “work until they drop”.