The current cost of living crisis will result in a significant increase to people’s state pensions when they are next updated. Soaring costs amid rising inflation will be duly met with a similar rise to the new pension rate.
After being suspended for a year due to the Covid-19 pandemic, the Treasury intends to return to the triple lock system. This is used to decide the extent of the increase in the value of the state pension in the new tax year, determined by the highest of either inflation, average earnings or a flat rate of 2.5%.
While the return of the triple lock has been positively received, the government has come in for criticism for not matching this increase for public sector workers who are calling for similar raises to their salaries. The argument made by the prime minister’s official spokesman, as reported by the i, is that people on state pensions were disproportionately affected by high energy costs.
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When will the state pension increase?
Every year, the state pension increases in April, so the next rise will occur in April 2023. The current year’s update saw the state pension rise by 3.1% following the suspension of the triple lock, despite the inflation figure at that point being around 9%.
This is because the level of increase is actually determined by the inflation rate from the previous September, meaning next year’s rise will likely catch up on any shortcomings this year. Subsequently, the updated weekly rate jumped to £185.15 while the basic rate (for people who started claiming before April 6, 2016) climbed to £141.85.
How much will the state pension increase by next year?
With the restoration of the triple lock system, the pension will rise in line with the inflation rate. Determined by September’s CPI figure, pensioners are predicted to receive an increase of around 10%, to match the vast rate experienced by consumers presently.
An increase by 10% would see an additional £960 a year added to the new state pension and £740 a year for those on the old rate.
When will I receive the state pension?
The state pension can be claimed once the age of 66 has been reached under the current system. This is forecast to be moved back to 67 between 2026 and 2028 before another shift between 2044 and 2046 to 68.
The increase to 68 could be brought forward by around seven years when the Department for Work and Pensions (DWP) determines whether the current schedule remains appropriate in its second review in May 2023. For those eligible, the state pension will be received within five weeks of reaching the required age, followed by a full payment every four weeks.
For the full state pension, the full amount can only be claimed if a minimum of 35 full qualifying years of contributions was accumulated. To get the full basic pension, you must have at least 30 qualifying years on your National Insurance record.
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