Pensions promise 'must be kept'

The Committee praised plans to boost women's pensions

MPs have urged the government to make good its promise to restore the link between the state pension and earnings.

The restoration was set out in May's pensions White Paper as a sweetener for accepting the state pension age rising to 68 by 2050.

But ministers added that restoration was subject to affordability.

The Commons Work and Pensions Select Committee said "such equivocation is unhelpful" and urged ministers to give a definite date for the restoration.

It warned delaying restoration beyond 2010-11 "will defer the benefits of the reforms for current and future pensioners".

Gordon Lishman, director general of Age Concern England, said it supported the committee's call for the link with earnings to be restored to the basic state pension as soon as possible "and no later than April 2012."

'Justifiable step'

The committee welcomed the main trust of the White Paper.

It praised plans to boost the pensions of women and carers and said raising the state pension age was a "justifiable step".

However, the MPs did express concerns at the possible impact on poorer people and those in manual jobs, who tend to die younger, of raising the state pension age.

The committee called for any increase in the state pension age to be "demonstrably linked to measures to reduce health inequalities and increasing access to training and jobs for older people".

Benefits question

It also had some concerns about the system of personal accounts - a low-cost national savings scheme.

It called for more information on how the system would interact with means-tested benefits such as Pensions Credit.

Overall, the committee said that it wanted to see means-tested benefits play less of a role in pensioner finances in future.

On Thursday ,the Pensions Policy Institute (PPI) said that the government may have got its projections wrong as to the proportion of pensioners who will claim Pensions Credit in the future.

Up to two-thirds of pensioners will be eligible for means-tested benefits by 2050, the think-tank said.

In response, the government said it disagreed with the PPI's analysis, instead estimating that just a third of pensioners will be eligible for means-tested benefits in the future.