Call for big pension rises

Many pensioners are living in poverty, say MPs

MPs are calling for an increase of more than £20 a week in the basic state pension to prevent more elderly people falling into poverty.

The influential social security group says ministers should either raise the pension to £90 or carry out their own study to decide a better figure.

Pensioners' money

State pension:

£67.50 a week for single people

£108 for a couple

With Minimum Income Guarantee:

£78.45 for a single person

£121.95 for a couple

And the MPs, who have investigated pensioner poverty, say the government should consider restoring the link between pensions and earnings.

At present, pension increases are linked to prices and this year's 75p-a-week rise was based on September's inflation rate of 1.1%. Pressure groups condemned the increase as "derisory".

Campaigners say it would be fairer to base increases on earnings, which are currently growing at 6%.

Higher taxes

Committee chairman Archy Kirkwood said the inquiry highlighted a great deal of "grinding" poverty.

He said: "If they don't like £90 they should get a figure they do like and then they should drive hard to make sure no pensioner household is living on less."

He said if all the government's package of measures now in place fail, the only alternative would be to uprate pensions by earnings.

The MPs said that index-linking the state pension to low but acceptable income or to earnings "is affordable".

But this was only "in the context of people being prepared to pay higher taxes and national income contributions in the long run".

"The government should raise the level of retirement pension for those aged 80, so that it is, and remains, at the equivalent level of the minimum income guarantee," the MPs said.

The group said a rise in the pension was inevitable and should be done "sooner rather than later".

Committee member Andrew Dismore said "£90 is what pensioners need to live on. We say we think there is a case for uprating the basic pension as part of that."

Minister's confession

MPs also attacked the government's flagship pensions policy, the government's minimum income guarantee (MIG) scheme. The scheme is aimed at reducing the severest poverty by targeting those worst off.

The MIG, which is means-tested brings a single pensioner's weekly income to £78.45 and a couple's to £121.95.

Last month, Social Security Minister Jeff Rooker admitted to the committee this figure was "not enough".

Many people say the 75p-a-week state pension rise is not enough

He said: "If you asked me could I live on £78.45 a week, the answer is no I couldn't.

"I would have problems living on £90. I don't think £78 is enough."

The MIG provides an extra income, paid on top of the basic state pension.

The state pension - £67.50 a week for a single pensioner and £108.00 for a couple - is paid to all pensioners, regardless of income.

'Pressure irresistable'

Age Concern had told the MPs it was impossible to live on £78.45 a week.

The charity says single people need between £99 and £125 and married couples £149-£184.

Gordon Lishman of Age Concern welcomed the MPs' report, saying the pressure was now irresistable to increase the pension.

He said it was also a challenge to opposition parties to agree targets to give security to older people planning for their retirement.

Poverty trap

An estimated £4bn a year is going unclaimed and the government launched an initiative in March to publicise the benefits.

Critics say the policy makes the poverty trap for those with a modest second pension or savings even steeper.

The government is planning to announce a "pensioner credit" scheme in November.

It says from next year, pensioners will receive "at least £2 a week" extra.

The government must respond to the report within two months.