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Pensions Act 2007

Changes

45.The changes will require the basic state pension to be uprated annually in line with earnings rather than prices, and will cover the up-rating of Category A, Category B, Category C and Category D pensions.

46.The Government stated in the White Paper:

“our objective, subject to affordability and the fiscal position, is to do this in 2012 but in any event at the latest by the end of the next Parliament. We will make a statement on the precise date at the beginning of the next Parliament”.

47.The changes will also require the standard minimum guarantee in state pension credit to be uprated annually in line with earnings.

48.In addition, the link between the amount of the lower earnings limit and the weekly rate of the basic state pension in a Category A pension will be broken. This will mean that the amount of the lower earnings limit will not automatically increase in line with earnings in the future. Instead, any future increase in the lower earnings limit will be at the discretion of the Treasury.

49.The provisions of the Act will ensure that the rate of the basic allowance in widowed mother’s allowance, widow’s pension, widowed parent’s allowance and bereavement allowance will continue to be uprated in line with prices, like other pre-retirement benefits. However, the proposals will ensure that the rate of widow’s pension and widower’s pension in industrial death benefit will be uprated in line with earnings in order to maintain the link with the rate of Category A pensions.

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