Project Pension Credit guarantee with earnings

changelog.d/2072.fixed.md

@@ -0,0 +1 @@
+- Corrects the Pension Credit standard minimum guarantee projection to follow the statutory May-July earnings input with a non-negative floor.

policyengine_uk/parameters/gov/dwp/pension_credit/guarantee_credit/minimum_guarantee.yaml

@@ -1,4 +1,8 @@
-description: Minimum income guarantee (basic amount) for Pension Credit.
+description: >-
+  Minimum income guarantee (basic amount) for Pension Credit. Values after the
+  last enacted rate use the non-negative May-July average weekly earnings input
+  from the annual statutory review as a forecast floor; they are not enacted
+  future rates.
 SINGLE:
   values:
     2015-04-06: 151.2
@@ -14,7 +18,7 @@ SINGLE:
     2025-04-01: 221.85
     2026-04-01: 238
   metadata:
-    uprating: gov.benefit_uprating_cpi
+    uprating: gov.economic_assumptions.indices.statutory_earnings_floor
 COUPLE:
   values:
     2015-04-06: 230.85
@@ -30,7 +34,7 @@ COUPLE:
     2025-04-01: 338.61
     2026-04-01: 363.25
   metadata:
-    uprating: gov.benefit_uprating_cpi
+    uprating: gov.economic_assumptions.indices.statutory_earnings_floor
 metadata:
   period: week
   label: Pension Credit minimum guarantee
@@ -40,3 +44,9 @@ metadata:
       href: https://www.legislation.gov.uk/uksi/2002/1792/regulation/6/2021-04-12
     - title: Benefit and pension rates 2026 to 2027
       href: https://www.gov.uk/government/publications/benefit-and-pension-rates-2026-to-2027/proposed-benefit-and-pension-rates-2026-to-2027
+    - title: Social Security Administration Act 1992 section 150A
+      href: https://www.legislation.gov.uk/ukpga/1992/5/section/150A
+    - title: Social Security Administration (Northern Ireland) Act 1992 section 132A
+      href: https://www.legislation.gov.uk/ukpga/1992/8/section/132A
+    - title: A14/2025 Housing Benefit uprating for the financial year ending March 2027
+      href: https://www.gov.uk/government/publications/housing-benefit-adjudication-circulars-2025/a142025-housing-benefit-uprating-for-the-financial-year-ending-march-2027

policyengine_uk/parameters/gov/dwp/state_pension/triple_lock/create_triple_lock.py

@@ -1,4 +1,4 @@
-"""Build the State Pension uprating series from the statutory inputs.
+"""Build statutory earnings and State Pension uprating series.
 
 Each April the basic and new State Pension rise by the highest of:
 
@@ -29,10 +29,13 @@
 earnings path started from its level in the year before the guarantee first
 applied. Current law leaves it off.
 
-The output parameter ``gov.economic_assumptions.yoy_growth.triple_lock`` holds
-the rate taking effect in April of each year, keyed to 1 January as the other
-growth series are, and runs to one year past the last year of the
-economic-assumption series.
+The output parameters hold the rates taking effect in April of each year,
+keyed to 1 January as the other growth series are. ``triple_lock`` applies the
+State Pension rule. ``statutory_earnings_floor`` holds the non-negative
+earnings component for amounts, including the Pension Credit standard minimum
+guarantee, that section 150A protects without extending the triple lock to
+them. Both run to one year past the last year of the economic-assumption
+series.
 """
 
 from dataclasses import dataclass
@@ -155,6 +158,13 @@ def uprating_rates(years: Dict[int, UpratingYear]) -> Dict[int, float]:
     return rates
 
 
+def statutory_earnings_floor_rates(
+    years: Dict[int, UpratingYear],
+) -> Dict[int, float]:
+    """Return the non-negative earnings rate from each statutory review."""
+    return {year: max(inputs.earnings, 0.0) for year, inputs in years.items()}
+
+
 def _flag(parameter: Parameter, instant: str) -> bool:
     value = parameter(instant)
     return bool(value) if value is not None else False
@@ -200,22 +210,53 @@ def read_uprating_years(parameters: ParameterNode) -> Dict[int, UpratingYear]:
 
 
 def add_triple_lock(parameters: ParameterNode) -> ParameterNode:
-    """Add ``gov.economic_assumptions.yoy_growth.triple_lock``."""
-    rates = uprating_rates(read_uprating_years(parameters))
-    new_parameter = Parameter(
+    """Add the statutory earnings floor and State Pension triple lock."""
+    years = read_uprating_years(parameters)
+    triple_lock_rates = uprating_rates(years)
+    earnings_floor_rates = statutory_earnings_floor_rates(years)
+    triple_lock = Parameter(
         "gov.economic_assumptions.yoy_growth.triple_lock",
         data={
             "description": (
                 "State Pension uprating taking effect in April of each year."
             ),
-            "values": {f"{year}-01-01": rate for year, rate in rates.items()},
+            "values": {
+                f"{year}-01-01": rate for year, rate in triple_lock_rates.items()
+            },
             "metadata": {
                 "unit": "/1",
                 "label": "State Pension uprating rate",
             },
         },
     )
+    parameters.gov.economic_assumptions.yoy_growth.add_child("triple_lock", triple_lock)
+    statutory_earnings_floor = Parameter(
+        "gov.economic_assumptions.yoy_growth.statutory_earnings_floor",
+        data={
+            "description": (
+                "Non-negative May-July average weekly earnings growth used "
+                "as the statutory uprating floor under section 150A."
+            ),
+            "values": {
+                f"{year}-01-01": rate for year, rate in earnings_floor_rates.items()
+            },
+            "metadata": {
+                "unit": "/1",
+                "label": "Statutory earnings uprating floor",
+                "reference": [
+                    {
+                        "title": (
+                            "Social Security Administration Act 1992 section 150A"
+                        ),
+                        "href": (
+                            "https://www.legislation.gov.uk/ukpga/1992/5/section/150A"
+                        ),
+                    }
+                ],
+            },
+        },
+    )
     parameters.gov.economic_assumptions.yoy_growth.add_child(
-        "triple_lock", new_parameter
+        "statutory_earnings_floor", statutory_earnings_floor
     )
     return parameters

policyengine_uk/tests/test_triple_lock_statutory_inputs.py

@@ -4,9 +4,10 @@
 earnings growth from the previous year. These tests check that forecasts of
 those inputs follow the OBR where it publishes them, fall back to
 calendar-year growth after, respond to macro scenarios applied before the
-data load, and can be set directly; and that the earnings-path guarantee
-models one reading of the plan announced in September 2026 as a
-parameter reform.
+data load, and can be set directly. They also check that Pension Credit uses
+the same May-July earnings input without inheriting the CPI and 2.5% elements
+of the State Pension triple lock, and that the earnings-path guarantee models
+one reading of the plan announced in September 2026 as a parameter reform.
 """
 
 import numpy as np
@@ -43,10 +44,21 @@ def uprating(parameters, year):
     return parameters.gov.economic_assumptions.yoy_growth.triple_lock(f"{year}-01-01")
 
 
+def statutory_earnings_floor(parameters, year):
+    return parameters.gov.economic_assumptions.yoy_growth.statutory_earnings_floor(
+        f"{year}-01-01"
+    )
+
+
 def new_state_pension_weekly(parameters, year):
     return parameters.gov.dwp.state_pension.new_state_pension.amount(f"{year}-06-01")
 
 
+def minimum_guarantee_weekly(parameters, relation_type, year):
+    guarantee = parameters.gov.dwp.pension_credit.guarantee_credit.minimum_guarantee
+    return getattr(guarantee, relation_type)(f"{year}-06-01")
+
+
 def statutory_inputs(parameters):
     return parameters.gov.economic_assumptions.statutory_uprating_inputs
 
@@ -63,6 +75,42 @@ def test_april_2027_uses_published_may_july_2026_earnings():
     )
 
 
+def test_pension_credit_uses_the_state_pension_statutory_earnings_input():
+    parameters = system.parameters
+
+    assert statutory_inputs(parameters).awe_total_pay_may_july(
+        "2026-07-01"
+    ) == pytest.approx(0.039)
+    assert statutory_earnings_floor(parameters, 2027) == pytest.approx(0.039)
+    assert minimum_guarantee_weekly(parameters, "SINGLE", 2027) == pytest.approx(
+        238 * 1.039, rel=1e-5
+    )
+    assert minimum_guarantee_weekly(parameters, "COUPLE", 2027) == pytest.approx(
+        363.25 * 1.039, rel=1e-5
+    )
+
+
+def test_pension_credit_earnings_floor_rounds_and_never_reduces_the_guarantee():
+    parameters = parameters_under(
+        {
+            f"{INPUTS}.awe_total_pay_may_july": {
+                "2027": 0.0124,
+                "2028": -0.004,
+            }
+        }
+    )
+
+    assert [
+        statutory_earnings_floor(parameters, year) for year in (2028, 2029)
+    ] == pytest.approx([0.012, 0.0])
+    for relation_type in ("SINGLE", "COUPLE"):
+        guarantee_2027 = minimum_guarantee_weekly(parameters, relation_type, 2027)
+        guarantee_2028 = minimum_guarantee_weekly(parameters, relation_type, 2028)
+        guarantee_2029 = minimum_guarantee_weekly(parameters, relation_type, 2029)
+        assert guarantee_2028 == pytest.approx(guarantee_2027 * 1.012, rel=1e-5)
+        assert guarantee_2029 == pytest.approx(guarantee_2028, rel=1e-5)
+
+
 def test_every_published_year_has_its_own_value():
     """A missing year would silently carry the previous year's figure."""
     inputs = statutory_inputs(system.parameters)