Skip to main content Skip to footer

The PPI is an INDEPENDENT educational, not-for profit research institute. We undertake rigorous research from a neutral, long-term perspective

Briefing Notes

Briefing Note 5 - The effect of the Conservative Party's pension policy

The benefit levels of the Basic State Pension (BSP) and the second state pension (SERPS for people retiring now) increase each year at least in line with the retail price index. There is also a means-tested top-up income available, the Guarantee Credit (GC) and a Saving Credit (SC) which rewards saving above the BSP. GC is expected to increase each year at least in line with average earnings, although this is not a statutory requirement. The Conservative Party has put forward new proposals aimed at stopping the spread of means-testing. They propose to reverse the index-linking practice: index the BSP to earnings, and the GC to prices.  

This Briefing Note compares the outcome of this proposal to the outcome of continuing current policy. It finds there are two groups who would gain financially from the proposed Conservative policy; higher earners who would see the full impact of the faster increase of state pensions, and poorer pensioners who do not claim their GC now, although these people would be worse off compared to their situation if they did claim GC now. 

Join our mailing list

Signup to receive all the latest news from the PPI

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. Find out more here