Thursday, March 4, 2021
  • Contact
Pension Changes
  • Government Policy
  • Pension Changes
  • Pension Information
  • Pension Rights
  • Retirement Pension
No Result
View All Result
Pension Changes
Home Pension Changes

State pension payments to rise by 2.5% but triple lock to be reviewed ‘as dust settles’ | Personal Finance | Finance

October 21, 2020
in Pension Changes
State pension payments to rise by 2.5% but triple lock to be reviewed ‘as dust settles’ | Personal Finance | Finance
0
SHARES
1
VIEWS
Share on FacebookShare on Twitter

State pension payments rise every year by the highest of 2.5 percent, national earnings rates or inflation. These measures are taken throughout the year and today, official inflation figures were released and as such, state pensioners will know how their payments will increase going forward.

Today, it was confirmed inflation (as measured by CPI) increased to 0.5 percent.

As average earnings figures were already released in July, it is now possible to determine how much pension payments will increase by as Ian Browne, a pensions expert at Quilter, broke down: “The confirmation that CPI inflation for September increased to 0.5 percent, together with the fact that average earnings growth fell by one percent between May and July this year, means that retirees are set for an inflation busting state pension boost next year, as long as the government sticks to the 2.5 per cent increase used in previous years.

“However, despite promising to “maintain their manifesto commitment” to the triple lock, DWP has discretion in setting the rate at which state pension benefits will increase, and are yet to confirm the exact figure they will use in 2021/22, although a 2.5 per cent increase is widely expected.“

READ MORE: All the state pension changes this month you should know 

The increase will be different for those who are receiving the basic state pension as opposed to the new state pension.

On this, Ian calculated exactly what will be received for both and what impact of the increases will have on the economy in the coming months: “If they do so, recipients of the individual full basic state pension will receive a £3.40 a week boost to their pension income next year, receiving £137.65 a week. Recipients of the new style state pension will receive an extra £4.40 a week at £179.60 a week.

“This is despite a challenging economic backdrop in which many workers are taking a cut to their pay packet, are working fewer hours than they would like, or have lost their jobs altogether.

“But even more contentious is the fact that once the furlough scheme ends later this year and if wages recover, in its current form the triple lock will provide an artificially large boost to state pension income in 2022/23 when we could be in the clasp of a deep recession and when the government is struggling to control the deficit.”

DON’T MISS:
State pension warning: Starting amounts may be lowered [WARNING]
Martin Lewis on the ‘complicated’ state pension inheritance rules [INSIGHT]
Martin Lewis breaks down ‘important’ pension tax rules
 [EXPERT]

Coronavirus has had dire effects on the economy and that impact is reflected in the official economic data.

Despite the downturn, Ian went on to warn wages could recover and while this may boost pensions higher in the coming years, the future of the triple lock itself remains uncertain.

As he concluded: “Once wages recover next year, average earnings growth is expected to bounce back to create a one-off spike in wage growth, estimated to be as high as five percent.

“This will increase the full basic state pension to £144.50 a week by 2022/23, and the new style state pension to £188.55 a week.

“However, the Social Security (Up-rating of Benefits) Bill 2019-21, which provides the Secretary of State with the legal powers to uprate state pension benefits at her discretion, will only have effect for one year, so the question remains whether the government will maintain their manifesto promise in 2022/23 and follow the same methodology for uprating state pension benefits.

“Baroness Stedman-Scott, DWP’s Minister in the Lords, has said that any future decision on the state pension triple lock will be made ‘in the context of the wider public finances’.

“Given the Treasury’s final tab for the Government’s Covid-19 response is likely to surpass £300bn, there is still the potential the triple lock to face the chop next year as the Chancellor Goes hell for leather in reducing the deficit.”

So long as the commitment to the triple lock is maintained, the new increase should arrive in April 2020.

The triple lock has proven to be controversial for the government and calls for ending the policy and ensuring it have rammed up in recent months in equal measure.

Those who want to see it removed usually argue it is too expensive and the government’s public spending bill is high enough already.

On the other side of this, defenders of the triple lock feel it would be unfair to pensioners to remove it, especially considering state pension payments are usually pretty low to begin with.

Currently, the government has made numerous commitments to the triple lock and has assured it is not being removed but Maike Currie, an Investment Director at Fidelity International, detailed reviews may be forthcoming next year: “Under the policy, retirees will see a significant rise in their state pension, while a chunk of the working population faces a major fall in their income as Covid-19 continues to wreak havoc on consumers earnings, businesses and by extension, the broader economy. “Unsurprisingly, many are calling for the triple lock to be reviewed, or even removed, and greater efforts from the government to ensure the cost of the pandemic is spread equally among different generations.

“It seems unlikely we’ll see any immediate changes to the pledge this side of Christmas, but as we move into next year and the dust settles these calls are likely to get only louder.”

— to www.express.co.uk

Related posts

Budget round up from Brewin Dolphin Wealth Managers

Budget round up from Brewin Dolphin Wealth Managers

March 3, 2021
Freeports, green recovery and levelling up: What North West business leaders want from Budget 2021

Freeports, green recovery and levelling up: What North West business leaders want from Budget 2021

March 2, 2021
Previous Post

Lawrence’s chief of staff heads to K Street

Next Post

Bank of Mum and Dad at growing risk of default

Next Post
Bank of Mum and Dad at growing risk of default

Bank of Mum and Dad at growing risk of default

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

RECOMMENDED NEWS

UK may ‘temporarily’ stop linking pensions to rising wages

UK may ‘temporarily’ stop linking pensions to rising wages

8 months ago
Lagos pays over N25bn as retirement benefits

Lagos pays over N25bn as retirement benefits

3 months ago
Almost 150 private schools notify govt of plans to leave TPS

A third of DB pension members could be covered by insurers by 2025

3 months ago
Boris Johnson under pressure over taxes and coronavirus as MPs return to Parliament

Boris Johnson under pressure over taxes and coronavirus as MPs return to Parliament

6 months ago

FOLLOW US

  • 81 Followers
  • 27.6k Followers

BROWSE BY CATEGORIES

  • Government Pension Policy
  • Pension Changes
  • Pension Information
  • Pension Policy
  • Pension Rights
  • Retirement Pension
  • Uncategorized

BROWSE BY TOPICS

2021 2021 Pensions bbc news CCP retirement check my state pension civil service pension reform Disabled pensions drawdown government policy examples uk how much is state pension lic pension plans Minutes of Meeting new state pension PAB Meeting Minutes PAB Minutes Pension age pension changes announced today pension issues pension meaning pension ombudsman pension plan pension reform definition Pensions Advisory Service Pensions Brexit pension scheme uk Pensions outlook retirement 2 million retirement pension sbi life saral pension plan calculator scams scheme funding Single mothers pensions State Pension State Pension age state pension changes state pension forecast State Pensions State triple lock the pensions regulator Therese Coffey uk pension age uk pension for eu citizens after brexit UK State Pension uk state pension age uk state pension calculator

POPULAR NEWS

  • Multiemployer pension reform not happening this year

    Multiemployer pension reform not happening this year

    5 shares
    Share 0 Tweet 0
  • Exit payment cap: Implications for the LGPS

    0 shares
    Share 0 Tweet 0
  • Public Service Pensions Update | October 2020

    0 shares
    Share 0 Tweet 0
  • What is the average UK retirement income?

    0 shares
    Share 0 Tweet 0
  • NEST: More than a pension | Country Report

    0 shares
    Share 0 Tweet 0

Follow us on social media:

Recent News

  • Budget round up from Brewin Dolphin Wealth Managers
  • Budget 2021 in review | TheBusinessDesk.com
  • Freeports, green recovery and levelling up: What North West business leaders want from Budget 2021

Category

  • Government Pension Policy
  • Pension Changes
  • Pension Information
  • Pension Policy
  • Pension Rights
  • Retirement Pension
  • Uncategorized

Recent News

Budget round up from Brewin Dolphin Wealth Managers

Budget round up from Brewin Dolphin Wealth Managers

March 3, 2021
Budget 2021 in review | TheBusinessDesk.com

Budget 2021 in review | TheBusinessDesk.com

March 3, 2021
  • About
  • Advertise
  • Careers
  • Contact

© 2020 Please contact us on partnership@pensionchanges.co.uk if you would like to reach our audience.

No Result
View All Result
  • Contact

© 2020 Please contact us on partnership@pensionchanges.co.uk if you would like to reach our audience.