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Blair and Brown reach pension agreement

The Prime Minister and Chancellor have reached agreement to restore the earnings link to the basic state pension, according to reports.
The basic state pension is now set to rise in line with earnings from 2012, later than Lord Turner recommended but still a significant victory for Tony Blair and Work and Pensions Secretary John Hutton.
The deal means the biggest barrier in implementing major pension reform has now been lifted after months of arguments between Number 10 and the Treasury on the issue of affordability.
It also paves the way for the rest of Turner’s reforms, including some kind of NPSS and a rise in state retirement age.
The link between the basic state pension and earnings was broken by the Conservatives in 1981 and the Treasury had huge reservations about restoring it. But strong political pressure and concessions around the timing of such a restoration appear to have shifted Brown’s position.
The Government’s white paper is scheduled before the Whitsun recess on May 25 and is set to include these changes to the basic state pension as well as some kind of paving stone legislation for an NPSS, with specific details on the scheme to follow at a later date.
Conservative Work and Pensions Secretary Philip Hammond says: “The news that Gordon Brown has lost his battle with Tony Blair over pension reform will come as a huge relief to many people. We have been calling for the basic state pension to be re-linked to earnings since before the last election and now it seems that, despite objections from the Chancellor, the Government have committed to doing just that.”

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