State Pension: Expert outlines criteria to qualify
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The Government has promised to reinstate the triple lock on state pension in April 2023 in a bid to support pensioners through the cost of living crisis. This pledge means that payments will either go up by either the rate of inflation, average earnings or 2.5 percent; whichever is the highest. After last year saw average earnings rise exponentially, the decision was made to hike the state pension by either 2.5 percent or inflation.
As a result, pensioners only saw a 3.1 percent payment hike in line with last September’s Consumer Price Index inflation rate.
While it is unknown how much the average earnings link could raise state pensions in 2023, inflation is expected to rise to new heights in the coming months.
Currently, inflation stands at nine percent but many expect it to reach as high as ten percent in the coming months.
Hypothetically, if the rate of inflation was to get to 10 percent, new state pension claimants would see a weekly payment rise of £18.50 from April of next year.
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Overall, this means that older Britons could see an extra £1,000 in their pension pot in 2023 which comes in handy with the rise in the cost of living.
Soaring inflation has meant that households are paying more for groceries and everyday utilities.
Furthermore, households on the energy price cap are currently experiencing a rise of £693 to their annual energy bills.
According to industry regulator Ofgem, the energy price cap could hit £2,800 in October which means the return of the triple lock could be an essential lifeline for families.
In his announcement, Mr Sunak said: “I can reassure the House that next year, subject to the Secretary of State’s review, benefits will be uprated by this September’s CPI.
“On current forecasts, (this) is likely to be significantly higher than the forecast inflation rate for next year. Similarly, the triple lock will apply for the state pension.”
However, the fact that pensioners will have to wait until next year for this payment boost is a point of contention for some financial excerpts.
In light of this, Helen Morrissey, a senior pensions and retirement analyst at Hargreaves Lansdown, shared why older Britons should apply for benefit payments such as Pension Credit in the interim period.
Ms Morrisey explained: “The Chancellor did confirm the pension triple lock would be back next year and added if inflation remains high then pensioners will receive a further boost.
“But again that is not until next April and many pensioners will need to battle through a winter where their costs will likely soar.
“Pensioners on a low income must check to see if they qualify for Pension Credit. This is a valuable, but underclaimed benefit that also acts as a gateway to further help such as the warm home discount scheme and help with bills.
“Pensioners on a low income should check to see if they qualify for Pension Credit as the extra support can really add up and help them through the difficult months ahead.”
Emma Byron, the managing director for Legal & General Retirement Solutions, added: “As the cost of living crisis continues to bite, this decision is good news for the many people who rely on the state pension to meet their income needs.
“It does, however, serve as a strong reminder that the state pension is hard to predict. As a result, consumers should ensure they’ve made their own private savings provisions too, in order to ensure a good standard of living in retirement.
“We’ve seen an uptick in people withdrawing from their personal pensions early and at higher rates, potentially because incomes are under pressure.
“This is something we are monitoring closely but hopefully the reinstatement of the ‘triple lock’ will provide some reassurance and help people struggling to make ends meet.”
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