Bring state pension in line with new inflation figures, ministers told

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Pension increases in April should be linked to new inflation forecasts in a one-off effort to tackle the cost of living crisis, campaigners have said.

Campaigners and former pensions ministers called on the Government to step in urgently to protect elderly people, who are already facing a difficult winter of rising energy bills, after City economists revised up their inflation forecasts for this year.

They said that the annual state pension, which will increase by just 3.1 per cent in April, was based on out-of-date figures and should be revised to account for the fact that inflation is likely to peak at more than double that.

The 3.1 per cent increase is pegged to the inflation rate in September, but price rises have escalated considerably since then on the back of soaring energy prices.

Capital Economics, a research consultancy, said that the index would come in closer to seven per cent in April, which is higher than the six per cent peak forecast by the Bank of England in November. By failing to keep up with inflation, pensioners’ incomes will fall in real terms.

Sir Steve Webb, the pensions minister under David Cameron, said: “This is a one-off situation that justifies using forecasts because we knew that this year’s figures would be volatile and erratic.

“It’s no good saying to a pensioner who is sitting at home with the heating on that they will get an increase next year… and it’s not just the poorest pensioners that this affects.”

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