State pension to rise by at least 5.5% next year as triple lock element ‘locked in’ | Personal Finance | Finance
New figures released today by the ONS show that wages in “real terms” fell by 2.8 percent from May to July this year. The average workers’ total pay excluding bonuses was 5.2 percent while for those with bonuses it was 5.5 percent. Head of pensions at Aegon Kat Smith stated that today’s figure was important for pensioners as it is used for one of the measures in the state pension “triple lock formula”.
Ms Smith said: “Under the triple lock, the state pension rises annually at the highest of earnings growth, total pay for three months to July, price inflation September CPI figure, or 2.5 percent a year.
“With inflation into double-digits, average earnings of 5.5 percent isn’t expected to be the deciding factor in next April’s state pension increase.
“The state pension is likely to increase by around double this at over 10 percent, confirmed in September’s inflation figure published next month.”
Inflation has hit a fresh 40-year high recently with the current level in the UK being 10.1 percent. It has caused living standards to drop at their sharpest rate since post-war rationing.
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It’s the Consumer Prices Index for the year to September 2022 which is usually used for the state pension triple lock – which is expected to be announced next month.
When inflation rises, it causes the price of everyday items such as fuel and food to increase.
The state pension is relied upon by millions to provide a decent standard of living in retirement.
With the cost of basic necessities increasing, as well as the cost of energy bills, a large majority of state pensioners are financially struggling.
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If inflation remains high, it could mean two consecutive years of increases for pensioners.
With the Bank of England (BoE) forecasts showing inflation set to reach 13 percent in October it is most likely going to be the case that state pensions rise.
According to a Canada Life survey, 55 percent of adults overall back keeping the triple lock under the current circumstances.
That breaks down to 78 percent among over-55s, 44 percent among 35 to 54-year-olds and 33 percent amongst 18 to 34-year-olds.
If the Government hadn’t suspended the triple lock this year, the state pension increase would have been decided by wage growth, which was 8.3 percent last autumn.
If state pension does not increase, pensioners may have to find others ways to increase there income with many maybe having to consider going back to work.
According to the ONS, the number of people aged 65 years and over in employment has increased by a record 173,000 in the three months to June 2022.
The ONS reports there are nearly 1.5 million people aged 65 years and over in employment which is a new record.
It said the “record increase” in numbers between April and June 2022 was driven by rises in part-time work.
