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The BBC's Carolyn Quinn
"Pensioners want money now"
 real 56k

Jeff Rooker, Social Security Minister
"The minimum income guarantee is a safety net"
 real 56k

Gordon Lishman, Director General Age Concern
"Older people should not be forced to live in grinding poverty"
 real 28k

Wednesday, 2 August, 2000, 15:09 GMT 16:09 UK
Call for big pension rises
Pensioner at gas fire
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".

Pensioner receiving her pension at post office
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.

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See also:

21 Mar 00 | Budget2000
'Lifting pensioners out of poverty'
16 Jul 99 | Health
The politics of long-term care
18 Sep 99 | UK
Pensioners demand 75 a week
17 Jan 00 | UK Politics
Pensioners 'insulted' by 75p rise
08 May 00 | Business
Pensioners' tax credit unveiled
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