§ Mr. WebbTo ask the Secretary of State for Social Security what assumption about the indexation arrangements for Income Support underlies his estimate that on unchanged policies one in three pensioners will be in receipt of Income Support by 2050. [94699]
§ Mr. RookerFor the above estimate, Income Support is assumed to increase in line with average earnings from the year 2000. The assumed rate of increase in average earnings is 1.5 per cent. per year above the rate of inflation.
Notes:
1. The estimate referred to above was obtained through an approximate extension of the results for 2025 of the Departments' microsimulation model, PENSIM.
2. PENSIM provides estimates of pensioners' incomes up to 2025. Using the 2025 income estimates, all sources of private incomes were assumed to increase in line with average earnings (1.5 per cent. per year above inflation) up to 2050. State income (other than Income Support) was assumed to increase only with prices. This provided an estimate of the distribution of pensioners' incomes in 2050. The model's caseload was re-weighted to reflect the projected size and composition of the pensioner population in 2050.
842W3. The number of pensioners in 2050 with estimated income below Income Support levels in this year was calculated. The same proportion of this group receiving Income Support in 2025 was assumed to receive Income Support in 2050. This resulted in an estimate of around 30 per cent. of the total pensioner population in 2050 receiving the benefit.
4. The Department does not currently have a tool to estimate pensioners' incomes in 2050 although a long-term project is underway to develop one.