Autumn budget 2022: The government has confirmed that the pensions triple lock and credit will be protected, and rise by 10.1% in April 2023.
Chancellor of the exchequer Jeremy Hunt told the House of Commons that the state pension will be uprated by inflation, rather than in line with average earnings growth, in line with its triple lock commitment.
He reported that increase should result in up to £1,470 extra for a couple and £960 for a single pensioner. The single tier state pension will rise from £9,627.80 a year to approximately £10,600 a year, or £203.85 a week. Meanwhile, the maximum basic state pension, payable to those who reached state pension age before April 2016, will rise from £7,376.20 to approximately £8,121 a year, or £156.18 a week.
This aims to ensure pensioners on the lowest incomes are protected from rising inflation rates and do not lose some of their state pension increase in the pension credit means test.
Chris Noon, partner at Hymans Robertson, said: “There is welcome relief that the government has stuck to its manifesto promise and retained the triple lock, providing pensions with long-term protection. With the cost-of-living crisis and rising inflation set to continue, too many pensioners continue to live on extremely low incomes leading to evermore worry for many.
“The UK state pension is one of the worst in the OECD and is the primary reason that the UK has such high levels of pensioner poverty. The triple lock provides long-term mechanism for increasing state pension relative to other wealthy countries and must be retained for the long-term.”
Chris Eastwood, co-founder of pensions provider Penfold, added: “Pensioners across the country will be welcoming today’s commitment to triple lock. Hopefully, today’s decision brings an end to the uncertainty and turbulence that has characterised the pensions industry for some months now. The removal of the triple lock would have only added to the worrying levels of pensioner poverty we are already seeing.
“However, at only £200 per week, the state pension is still not enough to afford a moderate lifestyle when you retire, so we are encouraging savers to consider alternative means of getting ready for life after work such as saving into a SIPP alongside your workplace pension and combining old workplace pensions throughout your career so you’re able to keep track of how much you have saved and where you need to get to.”
Andrew Tully, technical director at Canada Life, said: “This will be welcome news to the millions of pensioners struggling with the current cost-of-living crisis. However, given inflation for pensioners is likely to be higher than the headline 10.1% it may not completely cover the increases people are seeing in their outgoings. There is a sting in the tail as there is potential for the state pension to exceed the frozen personal income tax threshold by 2028, potentially dragging many millions more pensioners into paying income tax.”