Minister for Pensions Steve Webb said:

“We’ve taken a decision to restore the link with earnings and increase the basic State Pension by the highest of prices, earnings or 2.5%. This triple guarantee will ensure that pensioners can expect a decent offering from the state in retirement.”

Alongside the new benefit rates, a consultation setting out proposals and seeking views on the impact of using the Consumer Prices Index (CPI) for private sector occupational pension schemes is also launched today. It looks at whether there is a case for making it easier for occupational pension schemes to move to using CPI. The consultation recommendations propose to preserve and promote confidence in saving into private pensions.

Steve Webb said:

“We do not believe that Government should intervene to give pension schemes powers to change their rules if they do not already have such powers and our consultation out today will seek views on this approach. We need to ensure that people can have confidence in their pensions.”