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Last Updated: Friday, 3 December, 2004, 19:09 GMT
Chancellor reveals pension rises
By Paul Lewis
BBC Radio 4's Money Box

Older people
The basic pension will go up 2.45 a week from next April.
Poorer pensioners will get an extra 4 a week from April - or 6.10 more for couples - according to figures in the chancellor's Pre-Budget Report.

The 3.8% rise fulfils the chancellor's pledge to increase the pension credit paid to 2.6 million pensioner households in line with earnings.

It means that no single person aged at least 60 with savings of less than 6,000 should have an income below 109.45 a week, and no couple should live on less than 167.05, as long as they claim pension credit.

There is also a boost for pensioners aged at least 65 who have some extra income from savings, earnings or a pension of their own.

From April, the extra pension credit to top-up their weekly money will rise to a maximum of 16.44 a week, or 21.51 for a couple.

A small amount of extra money will be paid to people aged 65 or more with a weekly income of up to 150 a week if they are single, or 220 a week for a couple. The figures are different for people with savings over 6,000.

Basic state pension

The report also revealed that the basic state pension will go up by 2.45 a week from next April to 82.05 a week.

The lower pension paid to a married woman on her husband's National Insurance contributions will rise by 1.50 to 49.15 a week, giving a married couple a total of 131.20 a week, 3.95 more than the current rate.

These increases in the basic pension are in line with the September retail prices index which showed an annual rise of 3.1%.

It has also become clear that the "extra" 50 for people over 70 announced by Gordon Brown on Thursday is in fact a cut of 50.

This year, everyone aged 70 or more was given a further 100 payment on top of the winter fuel payment of 200 for those over 60 and 300 for people over 80.

So people aged over 70 got 300, and those over 80 got a total of 400.

The additional 100 payment was a one-off but was widely expected to be repeated next winter.

However, the chancellor announced that this extra payment would be just 50 in 2005/06, which would leave everyone over 70 with 50 less than they have received this year.

Rossi index

Other benefit changes from April will be announced on 6 December, and will come into effect on 11 April, 2004.

The rise in jobseekers' allowance, income support and other means-tested benefits is expected to be very small.

A different price index which excludes all housing costs is used to calculate the increase in these benefits.

It is called the Rossi index and went up by just 1% in September. That would give an increase of as little as 55p in the weekly money paid to many people under 60.

When Labour raised the retirement pension by just 75p in April 2000 there was a widespread outcry which led to a pledge that it would never happen again for pensioners.

Work and Pensions Secretary Alan Johnson will announce his decision on benefit rises on Monday.

BBC Radio 4's Money Box will be broadcast on Saturday, 4 December, 2004, at 1204 GMT.

The programme was repeated on Sunday, 5 December, 2004, at 2102 GMT.

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