RETIREES will get up to £230 extra a year in their state pension from April next year, the government has confirmed.It comes thanks to the triple lock
RETIREES will get up to £230 extra a year in their state pension from April next year, the government has confirmed.
It comes thanks to the triple lock system, which means pensions increase every year in line with inflation, earnings, or 2.5% – whichever is highest.
Meanwhile, earnings have been hammered this year due to the coronavirus crisis.
This is the fourth time the 2.5% triple lock has kicked in since the policy was introduced in 2011.
The move means the new state pension will rise by £4.40 a week to £179.60 in April next year – an increase of £228.80 over the year.
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While the old basic state pension will increase by £3.40 a week to £137.65 – giving pensioners an extra £176.80 over 12 months.
The full new state pension is currently worth £175.20 per week, while the previous full basic state pension was £134.25 per week.
The changes were confirmed yesterday in a written statement made by Secretary of State for Work and Pensions Therese Coffey.
The move is good news for retirees who would have likely seen their state pensions frozen next year if it wasn’t for the policy.
But pension experts said the announcement sends out a “difficult message” at a time when the working population is facing pay freezes.
Many working adults have suffered pay cuts, job losses or have been put on furlough this year as a result of the pandemic.
Yesterday, Chancellor Rishi Sunak also announced a pay freeze for millions of public sector workers – although NHS staff members will get a boost.
Ian Browne, pensions expert at financial services firm Quilter, said: “This will be welcome news for retirees and it means the Chancellor and Work and Pensions Secretary can, for now at least, avoid accusations of breaking manifesto pledges to the elderly.
“But it will be hard to ignore the fact that giving retirees an inflation-busting income rise, while simultaneously announcing a pay freeze on many public sector workers, is a difficult message.
“Whilst state pension incomes are protected for the coming year, there will be big pressure on government to unpick the triple lock over the remainder of this parliament.”
Steven Cameron, pensions director at financial services firm Aegon, added: “Every 1% state pension increase adds around £1billion to the ‘pay as you go’ bill met by earners below state pension age in every future year.
“The big question now is whether the triple lock will survive another year.
“Earnings growth is likely to be distorted and highly volatile for the foreseeable future, further exacerbated by the public sector pay freeze.”
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The rise comes as the pension age for men and women increased to 66 on October 6, up from 65.
For some women, this will be six years after they were originally told they would be able to claim their retirement fund aged 60.
We’ve rounded up everything you need to know about when you can retire in the UK and how you can claim a state pension.