Silver lining for some amid as state pension set to rise above £200

2022-08-18

Silver lining for some amid financial crisis as state pension is set to rise above £200

Millions of pensioners will receive a record breaking extra £1,000 per year
The state pension ‘triple lock’ should shield older households from inflation
It may ‘fuel debate about intergenerational fairness,’ says Tom Selby from AJ Bell

Millions of pensioners are on track for a record-breaking rise of nearly £1,000 a year, with the state pension rising beyond £200 a week.

Inflation is surging at its highest rate in decades and consumer prices have risen 10.1 per cent for the first time in 40 years.

And prices are set to soar again next month – with the Office for National Statistics (ONS) predicting another jump to 13 per cent.

While these figures spell bad news for working families, the state pension’s ‘triple lock’ should shield older households from the worst of the pain.

Millions of pensioners are on track for a record-breaking rise of nearly £1,000 a year, with the state pension rising beyond £200 a week

Under the triple lock, the state pension must increase each April by the highest of these three measures: inflation, wage growth or 2.5 per cent. However, it could cost taxpayers billions of pounds, experts warned last night.

Investment platform AJ Bell estimates the ‘triple lock’ could cost taxpayers £24billion over the next two years.

Tom Selby, from AJ Bell, said: ‘This will inevitably fuel a debate about intergenerational fairness, with pensioners having their real incomes protected while younger workers struggle.’

If prices increase in line with ONS forecasts, the new state pension will rise by £18.70 to £203.85 a week, £972.40 a year. Those on a basic state pension will see a boost of £14.35 a week, £746.20 a year.

Andrew Tully, a technical director at Canada Life, said: ‘While workers continue to feel the pain as wages lag inflation, there will be some positive news in the coming months for retirees. It is highly likely the state pension is on track to increase by a record amount in April 2023.’

The triple lock was suspended this year following as a result of unusually high wage growth of 8.1 per cent after the pandemic.

State pension income instead rose by 3.1 per cent, leaving older people £13,000 poorer on average.

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