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State Pension

The State Pension for people who reached State Pension age (SPA) before 6 April 2016 has two main elements. The basic State Pension (bSP), based on a person’s National Insurance contribution record, and the additional State Pension, which is partly earnings-related. Different uprating arrangements apply to each:

  • The statutory requirement is to increase the bSP at least in line with earnings (Social Security Administration Act 1992, s150A). However, the Government is committed to increasing it according to the “triple lock” – the highest of earnings, prices or 2.5 per cent (HC Deb 10 Feb 2020 c671). For the most recent uprating, earnings growth (+3.9%) was the highest of these benchmarks, meaning that the bSP rose from £129.20 to £134.25 pw in April 2020.
  • The statutory requirement is to increase the additional State Pension at least in line with prices (Social Security Administration Act 1992, s150 (1)). Since 2011, the measure of prices used has been the Consumer Prices Index (CPI). Accordingly, in April 2020, it increased by 1.7 per cent.

A new State Pension (nSP) was introduced from 6 April 2016 for people reaching SPA from that date. The legislation requires the nSP to be uprated at least in line with earnings (Pensions Act 2014, Sch 12 (19). Here also, the Government is committed to applying the triple lock. In 2020/21, the full amount of the nSP rose by 3.9% (in line with earnings growth) from £168.20 to £175.20 pw.

Pension Credit

For people who reached SPA before 6 April 2016, Pension Credit has two elements: the Guarantee Credit, which provides a minimum level of income; and the Savings Credit, which aims to provide an additional amount for people aged 65 and over who have made some provision for their retirement. The legislation requires the Standard Minimum Guarantee (SMG) in Guarantee Credit to be uprated at least in line with earnings (i.e. in 2020/21, by 3.9%). In the years 2010/11 to 2015/16, it was increased by the cash rise in the bSP (i.e; by more than earnings) to ensure that “the benefits of the triple lock uprating” were passed on to the poorest pensioners (Cm 8961, para 1.235).

The other elements of Pension Credit can be uprated by such a percentage as the Secretary of State thinks fit (Social Security Administration Act 1992, s150 (1)).  Savings Credit has been removed for people reaching State Pension age from 6 April 2016. People who reached State Pension age before that date may still be eligible. However, measures have been taken to reduce the amount payable in recent years – often through the combination of reductions in the maximum and increases in the threshold of income taken into account to calculate it (PQ226249 9 March 2015).

The rates of social security benefits – including the State Pension and Pension Credit – for 2020/21 were in the Social Security Benefits Up-rating Order 2020 (SI 2020/234).

Other relevant Library Briefing Papers include:  Benefits Uprating 2020 (CBP 8806); (CBP State Pension triple lock (CBP 7812); and Frozen overseas pensions (CBP 1147).


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