State pension alert: Liz Truss promises to raise payments by over 10 percent

Liz Truss slammed for 'ignore' Sturgeon comment by Purkiss

We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info

The Conservative MP is going up against former Chancellor Rishi Sunak in the Tory leadership and has affirmed her commitment to reinstating the triple lock. Introduced in 2010, the triple lock is a pledge to raise state pension payments by either the rate of inflation, average earnings or 2.5 percent; whichever is higher. Due to the Covid-era furlough scheme artificially inflating wages, the triple lock was temporarily suspended as the link to average earnings was scrapped for one year.

As a result of this, state pension payments would increase by either inflation or 2.5 percent.

With inflation being higher, those 66 or older found their payments rise by 3.1 percent in line with the rate as of September 2021.

However, inflation has skyrocketed in recent months with the current rate coming in at 9.4 percent.

Experts estimate that inflation could reach as high as 10 percent by September 2022 which will likely be used as the rate to which pension payments are raised.

READ MORE: State pension set to rise next year but 520,000 people will miss out

If an increase of 10 percent were to be implemented, pensioners could get a weekly payment hike of up to £18.51.

This would be an additional £74.10 per four-weekly pay period, according to the Government’s rounding policy.

For the new state pension, payments would go up from the current rate of £185.15 per week to around £203.70.

In comparison, the old basic state pension would jump from £141.85 per week to around £156.05.

As the leadership contest heats up, Liz Truss will hope this commitment to the triple lock will help her with Conservative Party voters.

Steven Cameron, the pensions director at Aegon noted the significance of Ms Truss’ pledge to reinstate the state pension’s triple lock.

Mr Cameron explained: “It was only a matter of time before state pensions made an appearance in the Conservative Party leadership contest.

“Reports suggest Liz Truss has committed to restoring the state pension triple lock for the next three years if elected Prime Minister.

READ MORE: Britons in higher bracket can do 2 main things to reduce tax payments

“The triple lock was suspended in April 2022, removing the link to earnings increases which had been distorted because of the pandemic and furlough. Rishi Sunak, before resigning as Chancellor, had also committed to reinstate it in April 2023.”

The pensions expert emphasised that older Britons will “expect” to see their payments go up significantly to mitigate the damage caused by the current economic downturn.

He added: “Having received an increase of only 3.1 percent in April, and with inflation currently running at three times this level, state pensioners will justifiably expect to receive the full benefit of the triple lock.

“It’s widely expected that price inflation for the year to September, which is the figure used, could reach double figures, creating a triple lock increase of over 10 percent.

“Perhaps the bigger question is whether the triple lock, which in current volatile times has proven very costly, will survive in its existing form in the manifestos of all parties ahead of the next General Election.

“Currently, this grants the highest of price inflation, national average earnings increases or 2.5 percent on a year by year basis.

“Moving to a formula which averages these indicators out over say a three year period would still protect pensioners but without the peaks and troughs a year on year approach could create.”

Any potential hike to state pension payments by the Department for Work and Pensions (DWP) will come into effect in April 2022.

The winner of the Conservative Party leadership election is expected to be known by September 5, 2022.

Source: Read Full Article