Andy Burnham (Photo: euronews)
The current system guarantees that state pensions will increase annually by the highest of three figures: inflation, average wage growth or 2.5 per cent. The Bernham government will retain this mechanism until the end of the current parliamentary term, Bloomberg reports.
After 2030, it is proposed to move away from linking pension increases to average wage growth. However, payments will still have to rise annually by at least the rate of inflation or by 2.5 per cent, whilst their ratio to average earnings is expected to be maintained in the long term.
The change is intended to free up funds to finance a new national social care service, which the government plans to make accessible on a basis similar to that of the National Health Service (NHS).
Burnham stated that the new system is intended to address the issue of high social care costs for citizens, although the final model for its funding has not yet been determined. Previous estimates of the cost of a universal social care system had reached around £18 billion a year, although the Prime Minister himself considers this estimate to be too high.
Thus, this is not a matter of abolishing state pensions or freezing payments, but of changing the mechanism governing their future growth. The specific details of the reform are to be presented following further consideration and will be included in the Labour Party’s manifesto for the next general election.
This story was translated with the assistance of artificial intelligence.The translation was also reviewed by the Logos Press editorial team.
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