The government was right to raise state pensions in line with inflation this year after it “abandoned” pensioners in 2022, former pensions minister Baroness Ros Altmann has said.
Criticism of the 10.1 per cent rise in state pensions this year is disappointing, she argued.
“Critics suggest pensioners should not have been protected like this, especially as wages increased by less than this,” Altmann said. “Such comments ignore the reality facing millions of pensioners in this country.”
Having broken the solemn promise to protect state pensions last year, it was only right to ensure a proper rise this time.
Baroness Ros Altmann, Former Pensions Minister
Pensioners were “abandoned” last year when pensions rose by 3.1 per cent while inflation was running at 10 per cent, she added.
The government had temporarily suspended the wages element of the pensions triple lock for 2022-23 to avoid a disproportionate rise of the state pension following the pandemic. This suspension has ended, and this year state pensions will rise with inflation.
Under the triple lock, the state pension is increased by the highest of earnings growth, price inflation or 2.5 per cent a year.
Altmann said it was right to “properly protect” state pensioners in the middle of a cost of living crisis.
Pensions level
She added that state pensions are already very low, with the basic state pension around £8,000 a year, rising to £10,000 for those who have reached pension age since 2016.
Although some are “well-off”, many are living on very low incomes and did not have the chance to build private pensions when they were younger, so they are completely reliant on national insurance social welfare arrangements, she said.
It is also important to remember that pensioners cannot earn more in the future to make up for low incomes now.
“Pensioner protection is a political choice about spending priorities. It is also a matter of morality and social responsibility,” Altmann said.
“Our welfare state is based on people working and contributing to society for most of their lives, with their contributions assuring them of a basic pension – not a fortune, but enough to enable them to afford essential bills in exchange, when they are too old to continue.”
Means testing
Altmann said calls for means testing for pensions would result in undermining private provisions for retirement.
If people are “penalised” for having a private pension, more and more individuals will not bother to save, she added. “The state must continue to pay a basic minimum, with auto-enrolment now helping all younger people to start private pensions.”
Finally, Altmann said that older pensioners must not be abandoned because some are well-off.
“Pensioners are still important members of our society and our welfare state contract requires them to be treated reasonably,” she said.
“Having broken the solemn promise to protect state pensions last year, it was only right to ensure a proper rise this time.”
This article originally appeared on FTAdviser.com
