Older state pensioners are set to receive £192.10 a week from next April after the triple lock delivers a 3.9% rise, worth around £374 a year, according to reports. The mechanism, which increases pension payouts every April by whichever is highest among average wage growth, inflation or 2.5%, remains in place for 2027.
Pensioners who started claiming DWP payments before April 2016 are entitled only to the old state pension. Those starting to claim after that date receive the new state pension, which distributes higher weekly payments but no longer includes certain elements, such as additional pension payments.
Triple lock changes deferred to 2030
Prime Minister Andy Burnham is planning to change the triple lock system, pending Parliamentary process, but any change will not be made until 2030. State pensioners will therefore still receive increases to their payments based upon the triple lock in 2027 as planned.
The Office for National Statistics said this week that the rate of Consumer Prices Index (CPI) inflation was 3.5% in September, rising from 3.1% in August. This does not beat the 3.9% wage growth figure that had already been published.
New state pension to reach £250.70 a week
With wage growth being the higher of the three metrics, people on the full new state pension are on course to receive £250.70 per week from next April, up from the current £241.30 a week. Someone on a full basic state pension would receive £192.10 per week, increasing from £184.90, reaching around £9,989 per year.
The absolute minimum rise possible for older state pensioners would be an extra £240.37 per year, as this is how much the current £9,614.80 annual payments must rise if the lowest possible increase, a flat 2.5%, is the metric used.
Tax concerns for pensioners
With the personal tax allowance frozen at £12,570, some pensioners could risk being caught within the tax net, with the annual new state pension poised to rise to around £13,036 next year, says The Express. The Government has said pensioners who are totally dependent upon the new state pension, being without a private pension, or the old basic pension, with no increments, will not have to pay tax. More details are expected in the upcoming Budget.
Rachel Vahey, head of public policy at investment platform AJ Bell, said: “Pensioners are set to receive just shy of £500 extra in their state pension next year. The full new state pension is set to surge past £13,000 for the first time, leaving the frozen £12,570 personal allowance trailing in its wake.
“The Government has promised that those living solely on a state pension above the allowance will not pay income tax on it - but the crucial detail on how that will work is still missing. Pensioners are now looking to next week’s Budget to fill in the blanks.”
