State pension costs rise to £96.6bn

Written by Theo Andrew
24/04/18

The Department for Work and Pensions has estimated it will spend £96.6bn on the state pension over 2018/19, despite equalisation of the state pension age.

In a select committee memorandum, the DWP said it will increase state pension spending by 3 per cent, or £2.8bn, in line with the "triple lock or September 2017 Consumer Price Index inflation".

The DWP said that state pension age equalisation “has a more significant effect on pension credit and housing benefit paid to pensioners”, with pension credit expenditure falling by 7.7 per cent.

The government said it expects to spent £4.9bn on pension credit over 2018/19, a £383m decrease on the previous year.

Furthermore, housing benefits expenditure for pensioners will fall from £5.8bn to £5.6bn, or a 2.8 per cent decrease.

Last year the government announced that it would increase the state pension age to 68 by 2039, seven years earlier than previously planned.

The move followed the “key recommendation” in the John Cridland Review, responding to a growing demographic and fiscal pressures.

The DWP said that over half of the departments annually managed expenditure is spent on contributory benefits, based on national insurance contributions, of which state pension dominates.

Total departmental spending is set to increase by 4 per cent, or £7bn, over 2018/19, with the cost of uprating the state pension contributing to almost 50 per cent of the increase.

The government said that it would be publishing an update of its Single Departmental Plan, last published in December 2017, in May 2018.

Related Articles

Cautious optimism in a challenging world
Matthew J. Bullock, Investment Director, Global Multi-Asset Strategies, Wellington Management, meets Francesca Fabrizi to discuss how multi-asset strategies can help investors

Latest News Headlines
Most read stories...
World Markets (15 minute+ time delay)