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People on the new full state pension will see their payments increase to more than £200 a week for the first time. But experts have warned this could be a “last gasp” for the triple lock policy, which guarantees the state pension increases each year in line with the highest of 2.5 percent, inflation or average earnings.
Those on the full new state pension will see their weekly payments increase from £185.15 a week to £203.85 a week.
Pensioners on the full basic state pension will also get a payment boost with their payments increasing from £141.85 a week to £156.20.
The return of the triple lock has been in doubt, after the average earnings element was suspended last year following the impact of the coronavirus pandemic, with payments increasing by just 3.1 percent in line with last year’s inflation figure.
However, Steven Cameron, Pensions Director at Aegon, warned the policy may not last much longer.
He said: “Today’s confirmation of honouring the triple lock for 2023/24 means pensioners can breathe a huge sigh of relief after a white knuckle roller coaster ride of past disappointments, new promises and a series of U-Turns.
“But next year’s increase could be its ‘last gasp’ as the current formula is looking increasingly unsustainable.
““Financially, it won’t have been an easy decision for the government looking to fill a £50billion fiscal black hole – every one percent increase in the state pension costs around £0.9billion a year.
“And this isn’t paid for out of some fund built up in the past but from the National Insurance paid for by today’s workers.
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“Honouring this Manifesto commitment after ditching it last time round will provide much-needed support for pensioners, many of whom are on low and fixed incomes and particularly vulnerable to rampant inflation.”
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, warned pensioners face a tough winter before they receive the payments boost.
She said: “After weeks of speculation about whether the triple lock would return next year many pensioners will be viewing today’s news with a sigh of relief.
“Soaring inflation has brought chaos to people’s finances this year and a 10.1 percent increase along with the extra cost of living payments of £300 will be hugely welcome for pensioners struggling to keep up with their bills.
“However, it’s also worth saying that this increase will only come into effect from April so there is a tough winter ahead and the Chancellor has been forthright in saying that times will be difficult for everyone.
“The reinstatement of the triple lock after its suspension last year will cool some of the discussion around its long-term viability for a while, but with a review of state pension age due to be published soon, now is the time to carry out a comprehensive review of the state pension to ensure it best helps those who need it most, both now and into the future.”
The Chancellor also announced that benefits including Pension Credit are also to increase by 10.1 percent.
Pension Credit provides support for people over state pension age on low incomes.
At the current rate, the support tops up a person’s weekly income to £182.60 if they are single or to £278.70 for those with a partner.
Ms Morrissey said: “The decision to uprate Pension Credit by 10.1 percent comes as a welcome surprise and will boost the income of single pensioners to around £201.
“They will also be in line for cost-of-living payments of £900. Pension Credit can make an enormous difference and acts as a valuable gateway to other benefits.
“However, not enough people are claiming it and more needs to be done to make sure that those who need it get it.”
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