Increase in state pensions guaranteed by the government, despite falling wages

0
33


Next year, the government confirmed that the state pension is getting a boost, in a measure that protects retirees from the worst economic damage caused by the pandemic.A bill is being introduced today that will prevent a freeze on the state pension next April. The current rules mean that payouts can only increase if average earnings increase. However, independent forecasters have forecast a 1 pc drop in wages for 2020, according to the Treasury. The government has said it does not expect any growth in average incomes due to “artificial distortion of statistics”.

The foreclosure restrictions have forced millions of workers to accept a pay cut as part of the leave program and have tipped many into dismissal. There were 695,000 fewer people employed in August compared to March, according to payroll data.

There has been much speculation that Chancellor Rishi Sunak is preparing to remove the “triple lock” on the state pension, fearing it will become unaffordable. But the government says the new bill marks a commitment to lockdown, which ensures that the state pension increases each year by the highest level of wage growth, inflation, or 2.5%.

Therese Coffey, the secretary for work and pensions, said it was “quite right” to ensure that retirees see their incomes protected next year as the government has worked hard to protect all groups of age during the pandemic.

She said, “In these tough times, I want to give retirees peace of mind about their financial health.”

The state pension is expected to increase by 2.5% if the triple lock remains in place, as wage growth is expected to be negative and inflation is expected to be between zero and 1%.

However, as the Telegraph previously reported, keeping the triple lock in place would protect retirees from falling wages and inflation this year – but significantly increase the state pension when wages return to previous levels. next year. This would affect the state pension from April 2022.

Wages are expected to rise sharply in 2021, returning to previous levels as the lockdown picks up and workers who have accepted a pay cut due to leave or layoff return to paid work. Calculations leaked by this newspaper showed that a strong wage rebound expected next year could add £ 10bn to the benefits bill in 2022.

LEAVE A REPLY

Please enter your comment!
Please enter your name here