State pension increase confirmed
The annual up-rating will take place in the first full week of the new tax year and applies to both the new flat rate state pension and the old basic state pension. Pensioners receiving the flat rate pension will see their weekly income rise from £155.65 to £159.55 per week. Those on the basic state pension will get £122.30, up from £119.30.
The triple lock guarantees that the state pension will increase by the higher of inflation, earnings growth or 2.5%.
The guarantee is only a government promise. Legislation requires only that the Basic State Pension increases in line with earnings.
The triple lock mechanism has come under attack recently, with a group of MPs calling it ‘unfair and unsustainable’.
In last week’s Autumn Statement, the Chancellor Philip Hammond confirmed it would stay in place until 2020.
However, he said it would be reviewed ahead of the next Parliament.
Tom McPhail, head of retirement policy at Hargreaves Lansdown, said: “Pensioners can’t continue to enjoy indefinitely a ‘heads I win, tails you lose’ guarantee at the expense of taxpayers. A review now looking beyond 2020 makes sense.
“The point of caution in favour of those approaching retirement is that final salary pay outs are about to start diminishing and some are arguing that existing private pension inflation proofing should be cut. Politicians have to strike a delicate balance but if they take too much away from pensioners they could end up sowing the seeds of the next pensioner income crisis.”