Reading through the Conservative parties policies I see one of their policies is to:
We will raise the basic state pension in line with earnings to help stop the spread of the means test.
The Liberal democrats have a similar policy:
The current pension system is unfair; the basic state pension is too low and it discriminates against women and carers who take time out of work. 2.1 million pensioners live in poverty in the UK today and 2 out of 3 of pensioners are forced to claim benefits to make ends meet. We will immediately restore the earnings link to the state pension so that pensioners share in the growing wealth of the nation
All well in good in principal, (I’ll be 65 year old in 2035) but how much will this cost the country?
According to government statistics there are over 61 million people in the UK in 2008. 62% of those are of working age (men aged 16 to 64 and women aged 16 to 59). 16% are of retirement age (65 for men, 60 for women), this percentage has increased by 1% (up from 15%) since 1983, while the number of under 16s have decreased in the same period from 21% to 19%.
In 1983 we had 600,000 over 85 year olds in the UK, in 2008 that had increased to 1.3 million!
The government predicts by 2033 we’ll have 3.2 million (5% of the population) over the age of 85 years!
Based on government statistics we are tending towards an aging population, birth rates are down, living longer is up.
If we are struggling today to give pensioners more money in the form of the basic state pension, how on Earth will we be able to afford to pay more in the future?
I’m curious what does it mean money wise to link the basic state pension to earnings, does it even result in an increase in money paid out to the retired (or a cruel trick to make it sound like it would) and if so by how much?
David Cameron Law
