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Pensions-inflation link dubbed "inappropriate"

It is "inappropriate" to link benefits such as pensions to the national average inflation rate, it has been claimed.

Investment company Alliance Trust said that those aged over 75 consistently faced a higher level of inflation than the headline rate.

It claims that during 2006, the inflation rate for the elderly was 56 per cent higher than official Consumer Price Inflation and that last year, the oldest households saw their level of inflation rise from 2.8 per cent in January to 4.6 per cent in December, an increase of 64 per cent.

Meanwhile, 30 to 50-year-old households saw an inflation rate that was an average of 55 per cent lower than that facing over-75s.

The difference was put down to older people spending the highest proportion of their income on necessities such as food and drink, housing, electricity and gas, which have seen some of the highest price rises in recent times.

Head of the Alliance Trust Research Centre Shona Dobbie commented: "Our findings, which show clear differences in the way inflation affects people in various age groups, suggest that it is inappropriate to link age-related benefits, such as pensions, to a national average for inflation."

New research from Insure4Retirement.co.uk revealed that fears over issues such as having a secure pension income, healthcare costs and council tax means that more than half of Britons hope to take their personal pensions and retire abroad.


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