State Pension  

State pension bill continues to rise

State pension bill continues to rise

Department for Work and Pensions spending on the state pension is still increasing, despite age equalisation between men and women.

According to a memorandum document sent by the DWP to the Work and Pensions select committee, state pension expenditure will rise 2.1 per cent in 2019-20 to £98.8bn, up from £96.8bn in the previous period.

Overall, the government’s benefit expenditure on pensioners – excluding housing benefit - is predicted to rise by 1.6 per cent in 2019-20 to £106.3bn.

DWP officials stated that the caseload is falling slightly as state pension age increases from 65 to 66, but this is more than offset by the uprating of the basic state pension by 2.6 per cent (average earnings) and additional pension by 2.4 per cent (consumer price index).

Under the current triple lock system, the state pension increases each year in line with whichever is the highest: CPI, average earnings growth or 2.5 per cent.

This year, the state pension has gone up in line with average earnings.

For many years, the age at which individuals can claim their state pension benefits was 65 for men and 60 for women.

But under the Pensions Act 2011, women's state pension age started increase more quickly to 65 between April 2016 and November 2018, with the exact date depending on the month they were born.

According to the DWP, state pension age equalisation has a more significant effect on pension credit, which will fall 3.2 per cent to £4.9bn.

More changes in the state pension age are expected in future years, at the same rate for men and women.

Since December, it has started to increase to reach 66 by October 2020. Between 2026 and 2028, it will increase again to 67.

In July 2017, the DWP decided the increase in the state pension age should be brought forward to 68 between 2037 and 2039 because of increases in life expectancy.

The change will leave 7.6 million people £10,000 worse off, according to analysis by the House of Commons Library.

maria.espadinha@ft.com

What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.