The state pension will go up by 10.1 per cent from April if the government implements the triple lock mechanism. This is in line with September’s inflation figures and will help protect 12.5 million pensioners from today’s cost of living.
This applies to both the new state pension and its predecessor, the old pension, which will be paid to retirees from April 6, 2016. Basic State Pension.
Yet in monetary terms, older pensioners get a smaller increase because the basic state pension has a much lower starting point.
The triple lock is under fire as chancellor Jeremy Hunt seeks another £40 billion worth of spending cuts.
The mechanism, introduced in 2010, increases both state pensions each year by inflation, earnings or 2.5 per cent, whichever is greater.
The government has refused to confirm whether it will implement the triple lock, and pensioners are now waiting anxiously.
On November 17, Hunt stands up to deliver his autumn report, and only then will we know for sure what will happen to the triple lock.
If he increased it to 10.1 per cent, it would cost the government an extra £10 billion a year.
Instead, many believe he will increase it due to the lower earnings number, which was 5.5 percent in September.
This would save HM Treasury around £5 billion, but would be a huge blow to every pensioner and especially those on the basic state pension.
Currently, the new State Pension pays a maximum of £9,627.80 a year for someone who has made 35 years of National Insurance (NI) contributions during working life.
A 10.1 per cent increase would raise the figure to £10,600.20. The increase is £972.40 per year or an extra £2.66 per day.
If the new state pension rises by 5.5 per cent, it will pay £10,157 a year, an increase of £1.45 a day.
It will be harder for those on the basic state pension, which currently only pays a maximum of £7,376.20 a year.
The inflation-linked increase will rise to £8,121.20, an increase of £745 a year or £2.04 a day.
If income increases further, it rises to £7,781.89, which is £405.69 more than a basic state pensioner.
That’s an extra £1.11 a day.
It’s nowhere near enough as the cost of food, fuel and everything goes through the roof.
Many people will still get a smaller increase because they are not making the full amount of NI contributions. 44 years for men or 39 years for women who retired before 2010.
The final six years of the old plan dropped to a less daunting 30 years.
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In practice, many people receive an additional State Pension through the State Earnings-Related Pension Scheme (Serbs) or the State Second Pension (S2P).
Many more women don’t qualify because they quit work to raise a family or simply don’t earn enough.
They face a real struggle, especially if widowed or divorced.
Sunak and Hunt axed the triple lock, sometimes not making it, earning as little as £1.11 a day.
However, they can claim an increase in means-tested state pension Pension loanAbout 850,000 failed to do so.
Another drawback is that Pension credit does not benefit from the triple lock And usually only increases with revenue.
Next year will be tough for many, but poor, elderly pensioners will be hit harder than most.
An extra £1.11 a day is not enough.
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