While it will take a little time to amend the FFBM and rerun the examples in the paper, it’s worth making a few points about older people and the announcements.
Pension Credit Guarantee basic amounts are tied to earnings by the Pensions Act which is how they escape / avoid the CPI link. At the moment earnings increases are lower than CPI but the OBR background papers that came out yesterday are predicting that they will pass CPI in 2014 on.
In our Future Benefits Model (FFBM) the result of this is, that in current values and using the OBR RPI and earnings forecasts, the basic PC Guarantee figures look like this:
2011 2012 2013 2014 2015
£137.35 £132.41 £137.08 £139.27 £139.27
£209.70 £202.15 £209.28 £212.64 £212.64
The SRP figure is ‘protected’ by the triple guarantee which increases the basic pension by the highest of:
(The RPI guarantee was for 2011 only)
The highest is CPI so it is increased by £5.30 (should be £5.3066)
The interesting presentational trick to me is that the government is trumpeting the increase in the threshold for Savings Credit as a good thing. It is in fact a reduction in benefit, and the maximum is still frozen.