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Union call to restore pensions link
01.01.09Union leaders have urged the Government to mark the centenary of the UK's first state pension payouts by restoring the link with earnings.
The TUC said people would still receive a reasonable increase in their pensions even if price inflation was close to zero if the link, abolished in 1980, was restored. Ministers have pledged to restore the link between pensions and earnings, but the TUC said it should happen sooner than the planned date of 2012.
Pensions are increased every April in line with price inflation the previous September, so the union organisation conceded that pensioners will do better next year than in recent times because of this autumn's relatively high inflation rate.
But officials argued that inflation could be close to zero next September, leaving pensioners with a tiny increase in April 2010, possibly just before a general election. Experts did not expect wage rise to fall as low as inflation, so restoring the link now would ensure pensioners would at least get a modest rise, said the TUC.
TUC general secretary Brendan Barber said: "Today (Thursday) we celebrate the 100th birthday of the first ever state pension - a crucial marker of any civilised society - and what better way to celebrate than restoring the link to earnings in the year ahead.
"Ministers deserve praise for already changing the law to allow this to happen in 2012. But they should bring forward the planned date, set well before the credit crunch turned the world upside down.
"Next year, price inflation could even fall below zero which would leave pensioners to face a miserly increase in April 2010 if there is no change. Earnings growth is not going to take off next year so restoring the link will be affordable, and will avoid the political mistake of imposing a tiny pension increase in what could be an election year."
On Pensions Day 100 years ago (January 1 1909) more than half a million over-70s collected their first ever means-tested pension of up to five shillings (25p) or up to seven shillings and sixpence (37.5p) for married couples.
Work and Pensions Secretary James Purnell said: "It is incredible to think that one in four babies born today could live to 100. Things have come a long way since 1909. People live longer and want more from later life. As the state pension moves into its second century we are committed to ensuring that pensioners receive the help they need."
Minister for Pensions and the Ageing Society Rosie Winterton added: "Today we salute the first pension pioneers who fought to provide security for people in old age. One hundred years on the state pension continues to be a foundation of support for people as they retire and we have taken steps now to ensure this will be the case for years to come."
