Millions of pensioners could be in for a bumper pay rise for the second year in a row if inflation forecasts prove to be correct.
Around 12.5m people claim the state pension, which rose to over £10,600.20 a year last month, or £203.85 each week for those who receive the new state pension, an increase of 10.1% And the Bank of England is forecasting inflation to be at 7% this September, which could mean a £750 rise next April under the triple lock system..
The triple lock was introduced in 2010 and is designed to shield older people from inflation, which can see people's real-term incomes drop. The name refers to the idea that the state pension rises in line with the highest of three measures every year:
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A flat 2.5% rise
Average earnings growth (measured from May to July each year)
Inflation (measured in the year from September every year)
The triple lock was temporarily suspended because of the pandemic and reduced to a double lock but was reinstated this year after inflation soared. The Government is yet to confirm whether the triple lock will stays in place, and the potential pay boost assumes inflation for September is 7%, although it could of course be higher or lower.
However, based on a 7% figure, it would mean the full state pension going up from £203.85 a week currently to £218.15 a week from next April for pensioners who turned pension age after April 6, 2016, or £742 a year, bringing maximum yearly payments to £11,342.
The basic state pension rate, which you get if you turned state pension age before April 6, 2016, would go up from £156.20 a week currently to £167.15 a week - a £568 a year boost, meaning the maximum amount someone on this state pension could get is £8,690.
However pensions expert Steve Webb told The Sun pensioners will be contending with a higher cost of living for around six months before getting the pay bump next April. The partner at LCP, said: "It is important to remember that this is simply compensation for the surging cost of living which pensioners are already having to finance. With a General Election due later in 2024, it would be very surprising if the Government chose to do anything less than increase the state pension in line with prices."
The state pension rose by 10.1% in April after inflation in September 2022 reached 10.1% and the rate has remained high, rising to 10.4% in February before dropping back to 10.1% in March.
Millions of pensioners will receive a £150-£300 top up to their Winter Fuel payment this year as part of the Government's cost of living package and pensioners and their families have been urged to check if they can claim pension credit, which will give them extra cash every week.
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It is thought that hundreds of thousands of households are not claiming the benefit, which is for retired people on low incomes, and tops weekly income up to weekly income to £201.05 per week for single people and £306.85 for couples in 2023/24. As well as being worth on average £3,500 every year, it also allows you to access a whole raft of other benefits, including council tax discounts, warm home discounts and free TV licences.
Pensioners can check their eligibility and get an estimate of what they may receive by using the online pension credit calculator
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