State pension changes: will the Triple Lock system be abandoned? PM “set foot” | Personal Finances | Finance

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State pensions are paid to those who reach public retirement age every four weeks. The amount you receive depends on your national insurance record, with contributions during your working life being added to your pension fund.

Each year, the state pension is increased by a percentage of one of the three amounts. This is known as the triple foreclosure system and typically occurs around April, depending on the tax year.However, the triple lockdown system has come under fire in recent months, with the increase for April 2021 expected to be huge for applicants.

Some activists urged the government to get rid of the existing system instead of implementing a more just policy.

Despite this, The Times reported that Prime Minister Boris Johnson has “put his foot down” and canceled Chancellor Rishi Sunak to maintain the triple lock on state pension increases.

Read more: State pension: applicants can cancel payments under these conditions

State pension changes: will the Triple Lock system be abandoned? (Image: GETTY)

How much will the state pension increase next year?

Part of Mr Johnson’s election manifesto pledged to keep the triple lockdown system for state pension claimants.

And so far, the government has kept that promise and has not given in to critics of the project.

The triple foreclosure system is the measure by which state pensions increase each year.

In April of each year, public pensions will increase based on wage growth, inflation, or 2.5 percent, whichever is greater.

State pension changes: a woman looks at the continuation of the pension

Changes in state pensions: The coronavirus pandemic and its impact on the economy have created a massive imbalance (Image: GETTY)

Critics were quick to point out the coronavirus pandemic and the subsequent impact on the economy created a huge disparity.

This means that the state pension could grow three times faster than prices or earnings, due to the huge drop in wages caused by the lockdown.

Economists then expect to see an expected increase in wages in 2021.

The Bank of England predicts a 2% drop in wages in 2020 due to a stagnant economy after the lockdown.

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This will then be followed by a 4% increase in 2021, as workers return to work and the economy stabilizes.

If the Bank of England forecast seems true, that would lead to a 2.5% increase in the state pension next year, then a 5% increase in 2022.

As a result, state pensions would see a two-year spike of a staggering 7.6%.

In turn, state pensions would cost the government an additional £ 3bn more in 2022 and an increase of £ 2.1bn in 2021.

State pension changes: Therese Coffey

Changes to state pensions: Work and Pensions Secretary Therese Coffey said government is considering changes to state pensions (Image: GETTY)

Steven Cameron, director of pensions at Aegon said: “This obscure technical detail has escaped the attention of pension experts and if the government had used it to justify the lack of a pension increase next April, it would have been a shock for millions of state pensioners.

“While removing the legal hurdle to granting a raise is good news, it may not be the last twist in the tail of the triple lockdown saga, as it remains to be seen. whether the government will stick firmly to this formula year after year.

“It could see retirees receiving a 2.5 percent increase next April and a much larger increase the following April if income growth rebounds from a decline.

“This could happen because many people of working age could struggle to regain their pre-Covid-19 income levels. “

Work and Pensions Secretary Therese Coffey told MPs the government is considering changing pension rules.

However, Ms Coffey gave no indication that the triple-locking system would be scrapped.

She told members of the House of Commons: “This government is absolutely determined to keep its clear commitments.

“It is by no means a question of abandoning the triple lock. But… there are consequences.

State pension changes: What is a state pension

Changes to state pensions: explanation of state pensions (Image: EXPRESS)

“If average incomes decline over the course of this year, we need to rectify to make sure that certain aspects of the law already in place cannot be dismissed.”

Retirees in the state have already seen a boost, as in April 2020, the payment increased 3.9%.

This is the biggest increase since 2012 and means the new state pension has increased from £ 168.60 to £ 175.20 per week.

So how much would that increase? Well, if the Bank of England forecast comes true, the 7.6% peak would see state pensions soar to over £ 188 by 2022.

This means that applicants would receive an additional £ 54 per month.

The Office of Budgetary Responsibility (OBR) has forecast an even larger increase. The OBR said the state lump sum pension will increase by more than 21% in the next two years alone.

This would first occur by 2.5% in 2021 and then by 18.3% in 2022.

These numbers are in line with the OBR’s forecast for the average wage to rise as the economy begins to get back on track.

Surprisingly, if the OBR prediction is true, state pension payments would drop from £ 175.20 per week to £ 212.45 per week – a difference of almost £ 150.



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