Labour MP Neil Duncan-Jordan calls for a universal system of retirement income and equal uprating for all pensions to address the widening gap between New and Basic State Pension rates
During the State Pension and benefits uprating debate in Parliament, Labour MP Neil Duncan-Jordan called on the Department for Work and Pensions (DWP) to “look again at the advantages of a universal system of income in retirement that reaches everyone”. The Poole MP also drew attention to the “unfairness” in payment rates between the New and Basic State Pension.
Mr Duncan-Jordan told fellow MPs: “For our older generation, the State Pension is the foundation on which a decent retirement can be built. The restoration of the Triple Lock has been key to raising the income of some of our poorest pensioners, which is why we need it to continue, but it would be wrong to say that the job has been done when we still have 1.9 million older people living in poverty.”
The Labour MP highlighted the disparity between the annual uprating in cash terms for those who reached State Pension age before April 2016 (Basic) or after 2016 (New), stating: “That is unfair, and we should consider uprating all pensions in the same way.”
Under the Triple Lock, both the New and Basic State Pensions increase each year in line with whichever is the highest between the average annual earnings growth from May to July (4.8%), the CPI inflation rate in the year to September (3.8%), or 2.5 per cent.
Additional State Pension elements and deferred State Pensions rise each year with the September CPI figure (3.8%), reports the Daily Record. The uplift means those receiving the full New State Pension will get £241.30 per week, while those on the maximum Basic State Pension would pocket £184.90 per week.
Speaking in Parliament, Mr Duncan-Jordan said: “Our social security system is the bedrock of our welfare state, but for years, the safety net that it was meant to provide has been developing bigger and bigger holes, through which some of our most vulnerable citizens have fallen.
“For our older generation, the State Pension is the foundation on which a decent retirement can be built. The restoration of the Triple Lock has been key to raising the income of some of our poorest pensioners, which is why we need it to continue, but it would be wrong to say that the job has been done when we still have 1.9 million older people living in poverty.”
He highlighted the “weakness” of the means-tested Pension Credit system, noting that approximately 750,000 older people are entitled to claim but haven’t yet done so, adding “that is why we need to look again at the advantages of a universal system of income in retirement that reaches everyone”.
The Labour MP went on: “Even in the current uprating arrangements, there is an unfairness. Some 8.3 million older people are in receipt of the pre-2016 State Pension, made up of a Basic State Pension and a second State Pension, which for many would have been SERPS (state earnings-related pension scheme) introduced by the late, great Barbara Castle.
“While the Triple Lock applies to the Basic State Pension for these people, the lower consumer prices index is used to uprate the second State Pension. This year, that will give a difference of 1 per cent, and over time, we have seen the gap between those on the old State Pension and the New State Pension widen. That is unfair, and we should consider uprating all pensions in the same way.”
The State Pension amount someone receives is based on their National Insurance contributions. Around 35 years’ worth are needed to qualify for the full New State Pension, though this may vary if you were ‘contracted out’.
The full New State Pension will rise by approximately £574 to £12,547 over the new financial year. However, the uprating leaves only £36 before breaching the Personal Allowance income threshold of £12,570, which would result in more pensioners with any additional income paying tax in retirement.
The UK Government recently confirmed that HM Revenue and Customs (HMRC) will introduce new measures next year to ensure that pensioners – whose only income is the State Pension – will not be required to complete a Simple Self Assessment tax return if their payment exceeds the Personal Allowance threshold of £12,570.
This follows Chancellor Rachel Reeves’ announcement during the Autumn Budget that the Personal Allowance will remain frozen at £12,570 until April 5, 2030 – extending the original timeline by three years. New State Pension payment rates 2026/27.
