Alistair Darling which much fanfare amidst a gloomy budget announced on Wednesday a 2.5% increase in state pension payments from 1st of April 2010. Which was clearly aimed at traditional labour voters ahead of a April or May 2010 General Election.

However an analysis of the details reveals that the 2.5% increase in pension payments is not really a 2.5% increase in pensions as it only applies to the basic state pension and not to other components that go to make up the total state pension.

The state pension is comprised of several components -

Basic State Pension
State Earnings Related Pension
State Second Pension
Delayed Pension Top Up

Whilst the basic state pension of £95.25 is the largest component, however due to individual pensioner circumstances it can amount to as little as 55% of the total state pension therefore the actual increase for millions of pensioners is significantly less than the 2.5% headline grabbing rate i.e. it could amount to an increase of as little as 1.40%.

The Labour party has succeeded in hoodwinking both the electorate and the mainstream press that ran with the story without as usual looking into the details.

By Nadeem Walayat
http://www.marketoracle.co.uk

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 400 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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