Pensions triple lock scrapped for millions of Brits
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The state pension typically increases based on the triple lock mechanism, a policy dating back to 2010. It means the state pension will rise by the highest of inflation, average earnings, or 2.5 percent each year.
The triple lock was temporarily suspended this year due to warped earnings data as a result of COVID-19.
But with the mechanism making its return, and inflation rising, pensioners are hoping for a significant financial boost.
Therese Coffey, DWP secretary, has committed to the pensions triple lock being honoured for the remainder of Parliament.
Ms Coffey confirmed the Government’s commitment when asked by shadow secretary, Jonathan Ashworth, as to whether the triple lock would return.
The news earlier in the year was widely welcomed by pensioners who had endured only a double lock increase this year.
Steven Cameron, Pensions Director at Aegon, previously highlighted state pensioners could secure a substantial increase.
He said: “Looking ahead, there’s a good chance that state pensioners will be in for a bumper increase in April 2023.
“The April 2023 increase will include inflation until September 2022.
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“It could pay inflation, or even more if earnings growth is higher again.
“Without any Government tinkering, this could put state pensioners on target for a bumper increase in 2023.
“It would potentially be the highest increase ever, compensating for the relatively low increase this April.”
The matter, however, will all depend on the level at which Consumer Prices Index (CPI) inflation is recorded in September 2022.
September has traditionally been the month at which the figures are checked to decide on the increase for the following tax year.
In June, the Bank of England predicted inflation would reach 11 percent this autumn, when energy bills rise.
Its previous estimates asserted consumer prices inflation would hit 10 percent.
This far exceeds the central bank’s ideal target of inflation sitting at two percent.
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The bank remarked: “CPI inflation is expected to be over nine percent during the next few months and to rise to slightly above 11 percent in October.
“The increase in October reflects higher projected household energy prices following a prospective additional large increase in the Ofgem price cap.”
While this is likely to put a squeeze on pockets, it could create the type of increase in state pension payments older people are looking for.
For example, if inflation was recorded at 10 percent in September – which is not unlikely – then the full new state pension could rise to above £200 for the first time ever.
It is currently £185.15 per week, but with a 10 percent increase would rise to £203.67.
Alternatively, a 12 percent inflation rate could see the full new state pension at £207.37.
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