State pension suffers worst gap to inflation in history of triple lock | Personal Finance | Finance
Another increase in the rate of inflation brought more bad news for pensioners struggling to cope with the cost of living. Retirees will suffer the worst disparity in their state pension payments compared to the inflation rate since the triple lock was brought in over 10 years ago, according to new calculations from Quilter.
It was announced in November 2021 that the state pension was to increase by 3.1 percent from April 2022, which was set using September 2021’s Consumer Price Index (CPI).
This meant a weekly boost of £5.55 to the full new state pension would come in from the start of the 2022/23 tax year, taking the sum from £179.60 to £185.15.
The latest figure announced today showed inflation running at 5.5 percent in the 12 months to January 2022.
This means pensioners would see a real term loss of 2.4 percent in the amount of income they will receive from the Government, based on the current figure.
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However, the disparity was only 0.4 percent on average over the period, significantly lower than the 2.4 percent difference seen today.
The subsequent state pension increase, to take place in April 2023, will be based on inflation in September 2022.
If inflation continues to surge in the coming months and then eventually cools off, the state pension increase could be higher than inflation when the 2023 rise comes into effect.
Jon Greer, head of retirement policy at Quilter, discussed the challenges pensioners are currently facing due to astronomical inflation rates.
He said: “We are in a fiscally unique time, with a cost-of-living crisis biting and inflation steadily increasing.
“This is causing financial hardship throughout society and unfortunately pensioners are far from immune from it and will see their state pension payments suffer a real term loss.
“For those retirees who rely solely on the state pension, this kind of reduction in the real value of their payments will hit them hard especially against a backdrop of rising food and energy prices.
“While this could prove to be a difficult year for many pensioners there should at least be light at the end of the tunnel next year when the next state pension increase is based on the inflation that we are experiencing.”
Age UK estimates around £2.2billion of Pension Credit and Housing Benefit goes unclaimed by older people.
These are potentially valuable benefits which could help older people cope with the cost of living.
Mr Greer urged anyone struggling to see if they can claim some of the other social security payments on offer “to make the rest of winter that much easier”.
This could include the Winter Fuel Payment, Cold Weather Payment, or the Warm Home Discount.
