The Department for Work and Pensions (DWP) rejected proposals in an online petition calling for an increase to the Basic State Pension weekly payment rate so that it matches the New State Pension. In its response, DWP said it is “not possible to make direct, like-for-like comparisons” between payment amounts under the pre-2016 State pension system and the New State Pension.
The latest UK Government figures show there are now 12.6million people across Great Britain receiving State Pension payments, including more than 992,000 living in Scotland. Of that overall total, there are 9.7million older people set to receive Basic State Pension payments of up to £156.20 per week, following the annual uprating on April 10, compared to 2.9million getting the New State Pension, which is now worth up to £203.85 each week.
However, despite a record-breaking rise in payments of the contributory benefit, it is estimated that over 1.8million pensioners are receiving less than £100 per week in State Pension payments.
The petition, ‘Increase the basic State Pension to match the new State Pension’ , was created by George Woods and posted on the official petitions-parliament website where it has received more than 14,190 signatures of support (at time of writing).
Mr Woods’ petition reads: “I get the old State Pension which is substantially lower than the New State Pension. I want the Government to increase the Basic State Pension to match the New State Pension, so everyone receives the same State Pension. It is not fair that some pensioners are treated like second class citizens.”
He added: “Only men born on or after April 6, 1951, and women born on or after April 6, 1953, are eligible for the new State Pension, which is paid at a higher rate.”
In its response, DWP highlighted how the UK Government is “committed to a decent State Pension as the foundation of support for people in retirement” and said it is forecast to spend around £152billion in 2023/24 on benefits for pensioners, including around £124billion on the State Pension.
DWP also explained that as a result of the Triple Lock policy, the State Pension saw its biggest ever rise, increasing by 10.1 per cent. This means the full yearly amount of the basic State Pension is over £3,000 higher, in cash terms, than in 2010 - some £790 more than if it had been uprated by Prices, and £945 more than if it had been uprated by earnings, since 2010.
Responding directly to the proposals to match the Basic State Pension with the New State Pension, DWP said: “It is not possible to make direct, like-for- like comparisons between State Pension amounts under the pre-2016 State pension system and the new State Pension.
“Although the systems are different, they both reflect the National Insurance contributions an individual has made over their lifetimes. It is not the case that everybody who receives the new State Pension will immediately receive the full rate of £203.85 per week and that everyone in the pre-2016 only receives the basic State Pension.
“Under the pre-2016 system, people receive different amounts depending on the National Insurance contributions they made. In addition to the basic State Pension, people could also have qualified for the additional State Pension for the years that they paid the full rate of National Insurance.
“This means that the State could pay them in excess of £200 on top of the Basic State Pension, which may result in a much higher State Pension amount than the new State Pension.”
Contracting out
DWPexplained that for years when someone was in an occupational pension scheme, and not paying into the additional State Pension, they paid a reduced rate of National Insurance and paid into a workplace or private pension instead. This is sometimes referred to as contracting-out.
DWP said: “Contracting out impacts both those in receipt of theNew State Pension and Basic State Pension. For those under the pre-2016 system, their workplace or private pension would also be paid in addition to the Basic State Pension.”
It added that there are other reasons why it is not possible to make direct comparisons between the pre-2016 and new State Pension systems.
“People in the new system will, in general, have to wait longer for their State Pension than those under the pre 2016 system,” DWP explained.
“The State Pension age has been 66 since 2020 and is rising to 67 by 2028. By contrast, most of those who receive their State Pension under the pre 2016 system will generally have received their State Pension at 65 or below, and therefore will in comparison with people on the new system, receive it for more years in total.”
Support for pensioners
DWP added that the UK Government is committed to alleviating pensioner poverty in several ways, including:
- Extra help for heating bills
- Cost of living payments
- Pension Credit
Pension Credit is a means-tested benefit and provides a top up for people of State Pension age to a weekly minimum amount of £201.05 for single people and £306.85 for couples. But, these payments may be higher for those with caring responsibilities, a severe disability or certain housing costs.
New claims made for Pension Credit before May 19, which later turn out to be successful will receive the £301 cost of living payment.
Who should check for Pension Credit eligibility
If you are over 65 and reached their State Pension age before April 6, 2016, you could still qualify for Pension Credit if your weekly income is less than:
- £218.80 if they are single
- £319.20 if they are a couple
People can check their eligibility for Pension Credit using the online calculator here or by calling the Pension Credit helpline on 0800 99 1234.
You can read the full response to the petition, which closes on August 13, 2023 here.
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