A leading independent pensions, investments and employee benefits specialist has said that ‘sticky inflation’ is likely to add hundreds of pounds to the State Pension next year. In April, State Pension and most benefits increased by 10.1 per cent as part of the annual Department for Work and Pensions (DWP) uprating.
The full New State Pension increased from £185.15 per week to £203.85, equivalent to £815.40 every four-week pay period and £10,600 over the 2023/24 financial year. The Basic State Pension rose to £156.20, from £141.85, equivalent to £624.80 every four-week period and over £8,122 over the coming year.
However, the unchanged May inflation figure of 8.7% could see pensioner households receive another bumper boost next April. Broadstone has calculated that if the Consumer Price Index (CPI) stays at its current level of 8% the State Pension would rise by £848 to £11,448 a year and even if inflation drops to 6% it would still drive a £636 increase.
Damon Hopkins, Head of DC Workplace Savings at Broadstone, said: “Having benefited from around a £1,000 increase to their State Pension this year, another substantial Triple Lock hike will further embed its importance to the retirement income of millions of pensioners - present and future.
“Given the delicate state of the Uk Government’s finances it will raise further questions around the viability of the Triple Lock. That said, it would take a brave Prime Minister to break a key manifesto pledge for the second time in three years so close to a General Election.”
The Triple Lock Guarantee
The Triple Lock determines the level of uprating for the State Pension and pays the highest between September’s CPI inflation rate, earnings growth, or 2.5 per cent.
Estimated State Pension payments from April 2024
The estimated calculations below show the current annual rates for the full New and Basic State Pensions.
How much someone receives depends on the number of years worth of National Insurance contributions, around 35 is needed for the full New State Pension, but this may be more if you were contracted out - find out more here.
Current Annual Full New State Pension - £10,600
8% inflation - £11,448 (up £848)
- Weekly: £220
- Monthly: £880
7% inflation - £11,342 (up £742)
- Weekly: £218
- Monthly: £872
6% inflation - £11,236 (up £636)
- Weekly: £216
- Monthly: £864
5% inflation - £11,130 (up £530)
- Weekly: £214
- Monthly: £856
4% inflation - £11,024 (up £424)
- Weekly: £212
- Monthly: £848
3% inflation - £10,918 (up £318)
- Weekly: £210
- Monthly: £840
Current Annual Basic State Pension - £8,122
8% inflation - £8,772 (up £650)
- Weekly: £168
- Monthly: £675
7% inflation - £8,691 (up £569)
- Weekly: £167
- Monthly: £658
6% inflation - £8,609 (up £487)
- Weekly: £165
- Monthly: £662
5% inflation - £8,528 (up £406)
- Weekly: £164
- Monthly: £656
4% inflation - £8,447 (up £325)
- Weekly: £162
- Monthly: £650
3% inflation - £8,366 (up £244)
- Weekly: £161
- Monthly: £643
The latest expenditure figures from the DWP show that the State Pension cost the UK Government an estimated £112.5 billion to deliver in 2022/23 and is forecast to rise to £139.5bn in 2027/28, in real terms. However, in nominal terms the estimated increase is more - from £109.7bn to £147.2bn.
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