The Department for Work and Pensions (DWP) has estimated that it will cost £2.5bn to uprate the state pension by 2.6 per cent in 2019/20.

This is predicted to bring the total government expenditure on the state pension up to £98.8bn, an increase of 2.1 per cent from the latest 2018/19 estimate.

The total annual uprating of pensioner benefits is expected to cost £3.7bn.

The DWP Main Estimate 2019/20 memorandum stated: “Reforms to working age benefits, including the current freeze on uprating of some, mean that spending on the state pension is growing as a proportion of DWP annually managed expenditure.”

Total government expenditure on pensioner benefits is estimated to increase by £1.7bn (1.6 per cent) from the 2018/19 forecast, to £106bn.

However, pension credit expenditure is predicted to decrease by 3.2 per cent to £4.9bn, “mainly as a result of the state pension increase”.

Costs for the Financial Assistance Scheme are expected to rise by 7.8 per cent, to £0.24bn, while winter fuel payments are forecast to decrease by 1.2 per cent, to £1.9bn.

The recent announcement that free TV licenses will be limited to over-75s receiving pension credit has resulted in the cost estimate to fall by 47.2 per cent, to £0.25bn.

The DWP has also been granted £76m of funding to cover the increased employers’ contributions following valuation of the Civil Service Pension Scheme, undertaken by Government Actuary’s Department.

The uprating of the state pension is in line with the government’s triple lock, which Pension Minister Guy Opperman recently defended, saying that it “guarantees that up to the full amounts of the basic and new state pensions will rise by the highest of average earnings growth”.

However, it has been recently criticised by a House of Lords committee and the TaxPayers’ Alliance, which described it as “egregiously unfair”.

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