Millions of Brits could be in line for a 5.7 per cent increase in their State Pension payments come next April, according to the latest figures from the Office for National Statistics (ONS). The data reveals that UK inflation fell to its lowest level in nearly three years this past April, indicating a potential boost from the Triple Lock system.
Aegon’s pensions director, Steven Cameron, has shed light on what the current 2.3 per cent inflation figure might mean for the State Pension Triple Lock. He suggests that these measures could potentially push pension payments up by 5.7 per cent as early as next April.
The Triple Lock mechanism guarantees annual increases in State Pensions, aligning with the highest of either average annual earnings growth from May to July, CPI in the year to September, or 2.5 per cent. Current statistics indicate an earnings growth of 5.7 percent for the period of January to March, 2024, reports Birmingham Live.
Read more:
- Three hunted for smashing up Barclays Bank
- Family of missing student make formal complaint about police
For those receiving the full New State Pension, this would equate to £221.20, or £884.80 every four-week pay period. A 5.7 per cent increase would represent a rise of around £50.
Steven further explained: “For the April 2024 increase, earnings growth in 2023 resulted in an inflation-busting 8.5 per cent increase. In April 2023, a surge in inflation the previous year led to a record-breaking 10.1 per cent boost to the State Pension.”
He added that these substantial increases, coupled with the high volatility observed in both price inflation and earnings growth, have sparked serious debates about the long-term affordability of the State Pension. This is particularly relevant considering it is funded by today’s workers through their National Insurance Contributions.
“The specific figure used for determining the Triple Lock will be the year-on-year increase in earnings for the period ending May to July 2024, which will be published in September. Barring a significant drop in earnings growth over the next few months, this figure will likely determine next year’s Triple Lock,” he added.
“If price inflation stays low and earnings growth also gradually falls back to levels more typical of the last decade, then the State Pension Triple Lock formula may produce more predictable and affordable increases,” he continued.
“This will make it less costly for the next Government to commit to maintain it for a further 5 years. We may see lower rates of increases, but in times of lower inflation, the State Pension doesn’t need to increase by as much to allow pensioners to maintain living standards.”