State pension payments look set to hit £10,000 next year

Campaigner appeals for state pension release for dying people

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State pension payments are likely to reach £10,000 annually next year if the Government’s triple lock “promise” is kept, according to experts. The last-Chancellor Rishi Sunak pledged to reimplement the policy after a temporary suspension of the triple lock last year. Tom Selby, AJ Bell’s head of retirement policy, cited the new Prime Minister’s previous support for the triple lock during the Conservative leadership election.

Mr Selby explained: “Liz Truss pledged to retain the state pension triple lock during the Conservative leadership contest – a promise which will almost certainly see the full state pension rise beyond £10,000 per year in 2023.

“The mini-Budget gives the new Prime Minister’s Government the opportunity to reaffirm that promise and shore up support among older voters.

“The triple-lock manifesto commitment was abandoned for 2022 because providing an increase of over eight percent, in line with earnings growth the previous year, was deemed too expensive.

“As a result, pensioners have seen their state benefits uprated by just 3.1 percent this year as inflation runs rampant – and the Exchequer saved around £5billion a year.”

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While pension payments only increased by just over three percent last year, inflation has skyrocketed over the last 12 months.

Currently, the UK’s inflation rate is at 9.1 percent and could potentially hit 18 percent within the next year, according to a forecast by Citi Bank.

In light of this, campaigners and charities are urging the Government to commit to its “promise” of a sizable state pension rise as the cost of living crisis grows.

The finance expert noted that older people on the full new state pension will likely be in receipt of over £200 a week if the triple lock is returned in full.

He added: “The key figure when it comes to the triple lock next year is CPI inflation in September, which most now expect to be in excess of 10 percent.

“A 10 percent rise in the value of the full state pension would increase the benefit from £185.15 per week to £203.65 per week, or almost £10,600 a year.

“It would likely cost the Treasury over £10billion – a hefty price tag even in the context of the huge Government support packages we have seen in recent years.”

What is the triple lock?

The triple lock is a “promise” made by the Government to raise state pension payments every year.

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Payments are raised either by the rate of inflation, average earnings or 2.5 percent, whichever is higher.

Due to the Covid-era furlough scheme inflating peoples’ wages during the pandemic, the triple lock was temporarily scrapped as a means of saving money.

This decision resulted in the “double lock” with state pensions only going up by either 2.5 percent or inflation, with the latter being used as the metric to raise payments.

While the pending increase to £10,000 a year will be welcome for state pensioners, claimants will not be in receipt of this boost until April 2023.

Helen Morrissey, a senior pensions and retirement analyst at Hargreaves Lansdown, noted this “feels a very long way away” for those who need it most.

Ms Morrisey said: “Last year’s 3.1 percent increase was no match for soaring inflation and has left many pensioners struggling and so a more generous increase will be welcomed.

“However, any such increase will not kick in until April which feels a very long way away right now for those struggling to make ends meet.”

The next state pension rise, as well as other benefit payments, will come into effect in April next year

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