Pensioners will get a 10.1% state pension rise to £10,600 a year after Chancellor honours triple lock promise
Older people on the full rate state pension will see an increase to around £203.85, or an annual income of £10,600
Chancellor Jeremy Hunt has delivered on the Government’s triple lock pledge and confirmed a 10.1 per cent state pension rise for the UK’s elderly population next April.
He averted a furious backlash by giving those on the full rate an increase from the current £185.15 a week to around £203.85, or an annual income of £10,600.
Older people on the basic rate state pension of £141.85 a week – topped up by additional entitlements if earned during working years – will receive an increase to around £156.20 a week or £8,120 a year.
The triple lock pledge means the state pension should increase every year by the highest of price inflation, average earnings growth or 2.5 per cent.
But Prime Minister Rishi Sunak sparked fury when he was Chancellor by scrapping the earnings element from last April’s state pension rise, because wage growth was temporarily distorted due to the pandemic.
Instead, pensioners received a 3.1 per cent hike, using the inflation figure from the previous autumn before it started to soar.
In the political chaos of the past few months, Liz Truss’s short-lived Government and Sunak’s new regime have sent mixed messages about whether they would implement the full 10.1 per cent increase linked to this September’s inflation rate.
The financial struggle many people currently face to meet household bills was highlighted by a further rise in the headline rate of inflation to 11.1 per cent last month.
The Treasury said: ‘Working age benefits will rise by 10.1 per cent, boosting the finances of millions of the poorest people in the UK, and the triple lock will be protected, meaning pensioners will also get a rise in the state pension and the pension credit in line with inflation.’
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Pension credit, which currently tops up weekly income to a minimum of £182.60 for single people and £278.70 for couples, will also rise by 10.1 per cent next April.
Steven Cameron, pensions director at Aegon, says: ’Pensioners can breathe a huge sigh of relief after a white knuckle roller coaster ride of past disappointments, new promises and a series of u-turns.
‘But next year’s increase could be its “last gasp” as the current formula is looking increasingly unsustainable.
‘Financially, it won’t have been an easy decision for the government looking to fill a £50billion fiscal black hole – every 1 per cent increase in the state pension costs around £0.9bn a year.
‘And this isn’t paid for out of some fund built up in the past but from the National Insurance paid for by today’s workers.’
Cameron adds: ‘The Government will no doubt have weighed up the reaction of pensioner voters if they scrapped the triple lock for a second consecutive year in the run-up to the next general election.’
Chris Noon, partner at Hymans Robertson, says: ‘There is welcome relief that the Government has stuck to its manifesto promise and retained the triple lock providing pensions with long-term protection.
‘With the cost of living crisis and rising inflation set to continue, too many pensioners continue to live on extremely low incomes leading to ever more worry for many.
‘The UK state pension is one of the worst in the OECD and is the primary reason that the UK has such high levels of pensioner poverty.
‘The triple lock provides long-term mechanism for increasing state pension relative to other wealthy countries and must be retained for the long-term.’