Budget: Earnings link with pensions to be restored


The link between the basic state pension and average earnings is to be restored from next year, the Chancellor has said.

From April 2011 the link will return, with the pension guaranteed to rise in line with earnings, prices or 2.5%, whichever is the greater.

The old link between average earnings and the state pension was cut in 1980, and replaced with a link to inflation as measured by the Retail Prices Index.

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