‘Sigh of relief’ for pensioners as triple lockdown confirmed for next April
Pensioners are heading for a 10.1 per cent rise in the state pension from next April after Chancellor Jeremy Hunt confirmed the triple lockdown was protected.
In the autumn statement, Mr Hunt said the government would fulfill its promise to protect the triple lockdown, which means the state pension will rise in line with inflation.
The state’s new full pension is currently £185.15 a week – so a 10.1 per cent increase would take that figure to £203.85.
For people on the old full state basic pension, who reached retirement age before April 2016, the increase means a weekly increase from £141.85 to £156.20.
The autumn declaration documents stated: “The state pension will be revalued by inflation, in line with the commitment to the triple lock.
“The standard minimum income guarantee in the pension credit will also increase in line with inflation from April 2023 (rather than average income growth).
“This will ensure that pensioners on the lowest incomes are protected against inflation and do not lose part of their state pension increase as part of the pension credit means test.”
The triple lockdown is normally used to calculate the state pension increase, but it was temporarily suspended due to the distorting effects of the coronavirus pandemic and state pensions rose by 3.1%.
The mechanism – an overt promise – ensures that state pensions increase by the rate of September inflation, wages or 2.5%, whichever is greater.
Consumer price index (CPI) inflation rose 10.1% in September.
In the final days of her premiership, Prime Minister Liz Truss said the triple lockdown would be protected, but uncertainty surrounded her future as it was unclear whether new Prime Minister Rishi Sunak would deliver on the pledge.
Ministers are said to have considered abandoning the manifesto promise due to the squeeze on public finances following the mini-budget fiasco.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “After weeks of speculation about the return of the triple lockdown next year, many pensioners will watch today’s news with a sigh of relief.”
She added: ‘However, it is also worth saying that this increase will only come into effect from April, so there is a tough winter ahead and the Chancellor was candid in saying that times will be tough. for everyone.
“The reinstatement of the triple lockdown after it was suspended last year will chill some of the discussion about its long-term viability for some time, but with a revision to the state pension age due to be released soon, Now is the time for a comprehensive review of the state pension to ensure it best helps those who need it most, now and in the future.
Ms Morrissey added that Pension Credit ‘can make a huge difference and acts as a valuable gateway to other benefits’.
She added: “However, not enough people are asking for it and more needs to be done to make sure those who need it get it.”
David Stevens, director of pensions at LV=, said: “Millions of pensioners will be relieved that the triple pension lock has been maintained. LV= research shows that 41% of over-65s can barely or cannot afford their daily expenses.
“The state pension is a crucial part of retirement planning.”
Chris Noon, partner at Hymans Robertson, said: “There is a welcome relief that the government has kept its manifesto promise and kept the triple lock, giving pensions long-term protection. With the cost of living crisis and rising inflation expected to continue, too many retirees continue to live on extremely low incomes.
Pete Glancy, head of policy, pensions and investments at Scottish Widows, said: “The Office for Budget Responsibility forecasts inflation of 9.1% this year and 7.4% next year. This means that £100 in your retirement pot at the start of 2022 will only have a relative purchasing power of around £83 at the start of 2024.
“However, despite announcements made today to ensure public pensions keep pace, key anti-inflation measures for occupational pensions are still on hold.
“The Chancellor has made no changes to the Lifetime Pension Savings Allowance, currently set at £1,073,100, after which savers face a 55% tax penalty.
“In today’s wildly inflationary economy, that means highly skilled, better paid workers risk penalties if their assets and wages simply keep pace with inflation, pushing their pots above that line. .
“In turn, this discourages senior professionals such as doctors and scientists from working longer hours, to avoid increasing the size of their retirement pot. In some cases, these specialists simply choose to retire early. »
A review of the legal retirement age to determine whether the current schedule is appropriate will be released in early 2023. It will need to balance several factors, including fiscal sustainability, the economic backdrop, the latest data on life expectancies and fairness for both retirees and taxpayers. .
Baroness Ros Altmann, former Minister for Pensions, said: “How we care for the elderly in our society, who have built this country over the years, is a political choice and I am delighted that the Chancellor has taken the right decision to properly protect retirees”.