Currently pensioners receive an increase in their pension each April in line with inflation, but as inflation is expected to fall rapidly throughout 2009, pensioners could face a tiny increase in April 2010.
The TUC estimates wage increases will not fall in line with inflation so linking pensions to wages should ensure at least a modest increase in pensions. The Government has pledged to restore the link to earnings, removed in 1980, in 2012.
Brendan Barber, TUC general secretary, said: "Ministers deserve praise for already changing the law to allow the link to earnings in 2012. But they should bring forward the planned date, set well before the credit crunch turned the world upside down.
"Next year price inflation could even fall below zero which would leave pensioners to face a miserly increase in April 2010 if there is no change. Earnings growth is not going to take off next year so restoring the link will be affordable and will avoid the political mistake of imposing a tiny pension increase in what could be an election year."
TUC wants link between state pension and wages
As the UK celebrates the centenary of the first state pension payouts, the TUC has called for the Government to restore a link between state pension and earnings.
