State pension increase: How much to expect from April 2023 under triple lock | Personal Finance | Finance
The state pension triple lock is a rule that means the state pension must rise each year in line with the highest of three possible figures, inflation, average earnings or 2.5 percent. The triple lock was a rule brought in by the Conservative-Liberal Democrat coalition government in 2010 and has been promised in each Tory manifesto since then. The Government uses it to make sure that people’s retirement benefits keep pace with the rising cost of living.
However, the triple lock was temporarily paused for the 2022-23 financial year.
Last year the Government made the controversial decision to only increase state pensions by 3.1 percent.
This is largely due to the impact of the COVID-19 pandemic on wages in the previous year.
As announced by the Office for National Statistics (ONS) today, the UK’s inflation rate has returned to a 40-year high of 10.1 percent after a slight drop last month.
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Last month, the UK’s Consumer Prices Index (CPI) rate was at 9.9 percent.
These figures are important as the September figure sets the rate for how much benefits and the state pension will go up.
There are two different state pensions available for eligible pensioners; the basic state pension and the new state pension.
People get the basic State Pension if they’re a man born before April 6, 1951, or a woman born before April 6, 1953.
Britons get the new State Pension instead if they are a man born on or after April 6, 1951, or a woman born on or after April 6, 1953.
The pension triple lock promise applies to both pensions.
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Someone on the basic rate pension will receive £141.85 per week and the full level of the State Pension is £185.15 a week in the 2022-23 tax year.
This then produces an annual income of around £7,300 and £9,600 respectively.
If the Government commits to the pension triple lock, then the increase will take place on the first Monday after the start of the new financial year.
In 2023, this will fall on Monday 10 April.
If the pensions triple lock promise is honoured and state pensions rise by 10 percent, then the new state pension could possibly increase to around £10,600 next year.
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This would be around £200 each week.
Anyone who reached state pension age before April 2016 would get £8,100 for the year, or around £150 a week
If the Government decides to scrap the triple lock promise and only increases state pensions by the rate of earnings which is current 5.5 percent, then the full state pension will rise to £195.35 a week.
This would increase the annual full state pension to £10,158.20.
According to wealth management firm Quilter, if the state pension increases by 10.1 percent, Government expenditure for it will be around £9.5billion annually.
Increasing state pensions by 5.5 percent would half this expenditure to £5.21billion.
While it was confirmed earlier in the year that the triple lock scheme could be reinstated for 2023, the Tories refused to commit to the pledge in a House of Commons debate held on Monday.
Commenting on the figures, David Denton, technical consultant at Quilter Cheviot said: “The government faces a difficult decision as Hunt steps in to balance the books.
“Pensioners will be hoping that the government honours its previous commitment to an inflation-based uplift next year as it will rely on the high figure released this morning.
“Not only would this result in a considerable pay rise for pensioners this year, but if the triple lock is then scrapped in subsequent years, they will at least have received this larger, potentially one-off, uprating.”
“Thanks to last year’s disappointing increase, pensioners will now be seeing their spending power rapidly swallowed up by soaring inflation and many will be struggling to make ends meet.
“Committing to the triple lock and keeping the inflation-based increase in place would provide a much-needed boost to pensioner income at a time when many are struggling.”
