Huge pension increase with payments to rise by up to £901 as triple lock remains unchanged
MILLIONS of people are set for a bumper rise of up to £901 to their state pension payments, it has been revealed.
It comes as Chancellor Jeremy Hunt has announced as part of the Autumn Statement that the pension triple lock will remain intact.
The Autumn Statement provides an update on the government’s plans for the economy.
These are issued twice a year, once at the Budget in the spring and once at the Autumn Statement.
Mr Hunt presents the plans for the next year during a speech in the House of Commons which includes tax and spending changes.
The amount pensioners get from the state rises every year in order to keep up with the cost of things like food and household bills.
Mr Hunt has now confirmed that payments will increase by 8.5% in April 2024.
That’s because the triple lock system sees the state pension rise in line with whatever is highest out of: wages for May to July, 2.5% or September’s inflation figures.
Speaking in the commons today Mr Hunt said: “The triple lock has helped lift 250,000 older people out of poverty since it was instituted in 2011 and been a lifeline for many during a period of high inflation.
“There have been reports that we would uprate it by a lower amount to smooth out the effect of high public sector bonuses in July, but that would have been particularly difficult for one million pensioners whose only income is from the state.
“So instead, today we honour our commitment to the triple lock in full. From April 2024, we will increase the full new state pension by 8.5% to £221.20 a week, worth up to £900 more a year.”
Growth in employees’ average total pay was 8.5% in the three months to July, while the UK’s rate of inflation remained at 6.7% in September.
It means pensioners on the new state pension could be looking at as much as £901 a year.
This is up from just over £10,600 to £11,501, and a weekly rise from £203.85 to £221.20 – an £17.35 increase.
It’s important to note though that this is for those entitled to a “full” new state pension.
How much individuals get is based on the number of qualifying years they’ve accrued.
Older pensioners who retired before April 2016 will get a weekly rise from £156.20 to £169.48, and an annual rise from £8,122.40 to £8,812.96.
Other elements of the old state pension system, mainly “additional” state pensions such as SERPS, will rise in line with the increase in CPI inflation for September which was 6.7%.
These new payments will come into effect at the beginning of the new financial year in April 2024.
The news today will come as a welcomed relief for millions of pensioners.
There had been talk in the past few weeks that Mr Hunt would opt to increase pension payments by the lower figure of 7.8% instead.
This was the July wages figure not including bonuses and one-off payments.
This is because the overall 8.5% figure includes one-off payments made to civil servants and NHS staff this summer to help settle pay disputes.
It would have seen a lower increase in pension payments of around £826 a year.
Last year, pensions, as well as benefits, rose by 10.1% in line with the September inflation rate.
The year before saw the amount recipients got go up by 2.5%.
Ministers have previously refused to guarantee the triple lock’s continuation beyond the election as inflation and earnings have spiralled.
Work and Pensions Secretary Mel Stride warned it was “not sustainable” in the long term.
But Rishi Sunak had said that he would not touch the triple lock, despite the concerns about cost.
How much state pension will I actually get?
The amount of new state pension you receive depends on your National Insurance (NI) record throughout your adult life.
If you have made at least 35 years of qualifying NI contributions, you may qualify for the maximum amount, outlined above.
The same is true if you have received equivalent credits on your NI record for raising children or providing care.
If you don’t have 35 years, you may be able to top up your record by paying in voluntary NI contributions.
To get the full basic state pension you will need 30 years of NI contributions or credits.
To get any state pension at all, you will need at least 10 years on your NI record.
What age do I get the state pension?
In response to rising life expectancy, the age at which you become eligible to receive the state pension has been going up.
The age is now 66 for both men and women and is set to reach 68 by 2039.
How do I claim the state pension?
You won’t automatically get the state pension – you need to claim it once you’re eligible.
You should receive a letter no later than two months before you reach state pension age, explaining what to do.
You can find out more here.
You can choose to defer getting the state pension – you don’t have to take it as soon as you are eligible when you reach state pension age.
Leaving your state pension untouched can boost the amount you eventually get.
If you opt to defer your state pension, your entitlement increases by the equivalent of 1% for every five weeks you do so.
As the state system can be tricky to navigate, a key part of any pension planning involves requesting a state pension forecast.
This will help you get your head around how much you could be eligible to receive, and from what age.
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