GUERNSEY’S old age pension will go up by more than the cost of living, if the States agrees.

It will increase by 2% next year under Social Security proposals, higher than the latest RPI figure of -1.3%.

The move will calm pensioners’ fears after a suggestion from Commerce and Employment minister Carla McNulty Bauer that the pension was generous and increases should be kept at RPI only.

Normally, the pension increase works out as RPI plus 1%.

Other contributory benefits, including sickness and unemployment, will also go up by 2% under the department’s proposals released in today’s Billet d’Etat.

However, family and winter fuel allowance and personal allowances for people in care homes will not rise.

Social Security minister Mark Dorey said it was an unusual year because the most-recent RPI figure was negative.

‘We recognise that this was largely the result of the global economic downturn and historically low interest rates,’ said Deputy Dorey.

‘Most pensioners don’t have mortgages or other borrowings, so haven’t had any advantage from the lower interest rates in that respect. It is more likely that they are disadvantaged because the interest they receive on any savings will be negligible.’

Taking that into account, a general increase of 2% in most benefit rates was reasonable, he said.

‘But recognising the severe pressures on general revenue expenditure across the States and bearing in mind the negative RPI, we’re not recommending an increase in family allowances.’