The state pension is due to top £10,000 next year as older people receive a double-digit pay rise to keep up with soaring inflation.
While public sector workers including doctors, nurses and teachers have seen a record drop in the value of their earnings, retirees will see their weekly pay rise in line with rising prices thanks to the government’s “triple lockdown” policy.
The triple lock is a commitment to increase government pension entitlements through consumer price inflation, average wage growth, or 2.5%, whichever is higher.
Consumer price inflation hit a 40-year high of 10.1% YTD through July, official data released this week show, and the Bank of England expects it to top 13% later this year.
The Basic State Pension is £141.85 per week or £7,376.20 per annum and the New State Pension – for those who reached State Pension Age on or after 6 April 2016 – is £185.15 per week or £9,627.80 per annum.
If inflation hits 13 per cent in September, the basic state pension will rise by £18.45 next April to £160.30 a week, or £8,335.60 a year. The new state pension will rise by £24.10 to £209.25 a week or £10,881 a year.
This would more than double the current rate of wage increases for employees, which average just over 5% overall and just 1.8% for public sector employees.
Low-income retirees are expected to be hit hard by the spike in energy costs.
The average weekly government pension payment in February this year was £159.81, or £8,310 per annum. A rise in average electricity bills to £3,582 in October would mean electricity costs will account for 43% of average retiree income this fall.
This would leave those who relied on the state pension just £90 a week to spend on food, petrol and other basic living expenses such as clothing, home and car repairs.
However, many retirees living alone tend to use less energy than the average household, and the triple lock policy means many relatively wealthy people will see a protected portion of their income while Britain’s poorest people bear the brunt of inflation.
Price growth rates will hit a staggering 18% for the lowest-income households, nearly three times the minimum wage this year, according to the Institute for Fiscal Research.
Families receiving government benefits have already seen a big drop in their incomes after Rishi Sunak canceled a £20-a-week increase on universal credit last year.
Chancellor Nadhim Zahavi said: “I understand that times are tough and people are worried about the price increases that countries around the world are facing.”
Ministers suspended the triple pension lockdown for one year in April 2022 as the end of the furlough scheme artificially inflated average earnings growth.
But the government is returning it to an annual renewal of pensions and other benefits, which will come into effect in April 2023.
Credit: www.independent.co.uk /