Each year, the state pension will increase by the highest rate of inflation, 2.5%, or average wage growth for a set period – under a deal called the triple lock.
But the triple lockdown is expected to work in favor of retirees next year, as wage growth is expected to rise 8% in the three months to July, according to the Office for Budget Responsibility (OBR) today.
This record increase in wages is due to the fact that average incomes were lower during the lockdown and then increased again when the country started to return to work.
An 8% increase in the period means the state full pension goes from the current maximum of £ 179.60 per week to £ 194 from April 2022.
Last month, the Office for National Statistics issued a similar judgment to the OBR, claiming wages increased by 8.4% in the year until April 2021.
How much will I be entitled to the additional state pension?
An 8.4% increase would mean the state’s current full pension would rise to £ 194.60 per week from next April.
But the actual amount you get depends on your national insurance record.
Older retirees claiming the basic state pension, currently no more than £ 137.60 per week, would get an additional £ 11.55, bringing the total to £ 149.15.
It is open to men born before April 6, 1951 and to women born before April 6, 1953.
The 8.4% increase would mean the Treasury would spend an additional £ 3bn on the state pension in 2022.
What is the certainty of this increase in the state pension?
Technically, that’s 100% certain – the way the triple lock on state pensions has worked since 2010 would guarantee that.
But this is an unusual time, and politicians may step in to curtail retiree celebrations.
Some Tory MPs already want to mitigate the massive increase, arguing the country cannot afford to pay additional retirees due to a pay odd when it already has a huge bill for Covid-19.
Despite popular belief, there is no state pension “kitty” that is built while we work and pay for national insurance.
Instead, the state pension for retirees today is paid by those who are currently working.
For this reason, MPs also believe workers will oppose a sharp increase in state pensions as many have seen their wages and benefits cut during the pandemic.
Speaking to the Telegraph, Nigel Mills, Conservative chair of the all-party parliamentary group on pensions, said: “The triple lock was not meant to be based on artificially offline income data. “
Chancellor Rishi Sunak has reportedly already considered watering down the triple lock, even before the wage hike.
However, the current 8% increase to 8.4% may also change slightly in the coming months.
The state pension increase is signed in November of each year.
In April, the state pension increased by 2.5% per week thanks to the triple lock.
The state pension is generally paid every four weeks , suffering.
It’s vital for retirees, but many are unknowingly underpaid and not getting the payments they deserve.
If you have a shortfall in your pension, you may be able to apply for pension credits to reload it.