Government Response

The Government responded to this petition on Friday 4th October 2019

Government has no plans to link State Pension with National Minimum Wage. We want a decent, secure income for people in retirement, and will spend over £120 billion on pensioner benefits in 2019/20.

Comparisons made in this petition between other countries and the National Minimum Wage do not take into account the full package of measures available to support people in retirement. We are committed to ensuring economic security for people at every stage of their life, including when they reach retirement.

We spend over £120 billion on benefits for pensioners, including the £99 billion on the State Pension predicted for this year 2019/20. State pension spend is expected to increase from 5.0% of GDP in 2022-23 to 6.9% in 2067-68.

It is very difficult to make meaningful comparisons between pension schemes in different countries because there are so many fundamental differences in the way they are run. You have to look at the whole system, not just State Pension.

There are many other factors to take into account – different tax systems, different healthcare systems, different pension ages, cost of living, access to occupational pensions and the availability of other social security benefits, as well as the provision of services and goods free to pensioners or at concessionary rates.

This petition suggests linking the State Pension and the National Minimum Wage. The two have different purposes, and a direct comparison cannot be drawn. The National Minimum Wage is designed to protect low income workers and provide an incentive to work by ensuring that all workers benefit from as generous a wage as possible.

The Government introduced the Triple Lock and recommitted itself to it for the duration of this Parliament, guaranteeing that up to the full amounts of the basic and new State Pensions will rise by the highest of average earnings growth, price inflation, or 2.5%. As a result, the full yearly amount of the basic State Pension in 2019/20 is around £675 higher than if it had just been up-rated by earnings since April 2010. That’s a rise of over £1,600 in cash terms.

This Government has always acknowledged that it is important that a safety net exists for those pensioners who find themselves without an adequate income in retirement. Pension Credit is a means-tested benefit, paid for out of general taxation. It is made up of 2 parts: the Guarantee Credit, which tops up other income to a standard minimum level (for a single person this is currently £167.25 a week and for a couple £255.25) and, for those who reached State Pension age before 6 April 2016, the Savings Credit, which is an extra amount for those who have made some additional provision for their retirement. The Government also continues to provide some non-means tested benefits for people in retirement.

In 2016, the Government introduced the new State Pension to provide a simpler, clearer and a sustainable foundation for private saving. With the new State Pension, people will know from a much younger age how much they’re likely to get, providing a solid base for their saving and retirement planning.

Department for Work and Pensions.