Prime Minister David Cameron has hailed a £5.30 weekly boost to state pensions that comes into force today as proof of the Government’s “commitment to the elderly”.
Basic rate payments will increase to £107.45 a week after inflation in September – the month when the uprating of benefits is set – hits 5.2 per cent.
It comes after intense criticism of the Government’s treatment of pensioners in the wake of last month’s Budget.
Chancellor George Osborne announced he was “simplifying” tax arrangements by phasing out age-related allowances, a move that was instantly dubbed the “granny tax”.
Mr Cameron said yesterday: “We owe older people in society our respect, our support and our care. That’s why from the start I’ve made sure this Government protects pensioners and gives them the help they need.
“We brought in the triple-lock to restore the link between pensions and earnings – guaranteeing the basic state pension rises by whichever is highest out of rises in prices, average earnings or 2.5 per cent.
“Today we’re delivering with a 5.2 per cent increase in the basic state pension, an extra £5.30 a week, the largest cash rise in history.
“At a time when we’re having to make cuts elsewhere, this is further proof of this Government’s commitment to the elderly.
“Already we’re protecting free national bus travel and free TV licences for the over-75s, backing the Winter Fuel Payment and increasing spending on the NHS.
“I know these are difficult times – but my promise to pensioners is that we are on your side.”
The payment increase will cost the Treasury an extra £4.5 billion this year.
When additional pension payments are included, such as entitlements built up under the State Earnings-Related Pension Scheme (SERPs), average state payments will now be £124 a week, according to officials.
Steve Webb, Liberal Democrat Pensions Minister, said: “My first concern is to make sure our pensioners have a decent income in retirement, and that’s why we are paying out £4.5 billion extra from today, boosting the average state pension to £124 a week.
“Uprating the basic state pension by the highest of earnings, prices or 2.5 per cent will have a dramatic impact in driving up the value of the state pension.”