State pension triple lock increase does not cover ‘basic standard of living’ | Personal Finance | Finance
New and basic state pension payments will be increased by 10.1 percent in April with the return of the triple lock. As a result, payments are expected to exceed £10,000 a year for the first time ever amid the ongoing cost of living crisis. However, research from the Pensions and Lifetime Savings Association suggest this will not meet the “basic standard of living” in the UK.
What is the triple lock?
Since 2010, the Government has promised to raise state pensions by either 2.5 percent, average earnings or inflation; whichever is higher.
Last year, the triple lock was temporarily suspended due to wages being inflated over the course of the Covid-19 pandemic and with the Government attempting to save money.
However, Chancellor Jeremy Hunt has confirmed the triple lock will return this year in full for claimants.
With the Consumer Price Index (CPI) rate of inflation hitting 10.1 percent in September 2022, this will be used as the metric to determine how much payments will be increased by.
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How much will the state pension be?
As it stands, the full new state pension is £185.15 per week and is available to Britons once they reach 66 years of age. Comparatively, the full basic state pension is £141.85 weekly.
Come April, the full new state pension payments will increase to £203.85 a week, while the basic state pension will jump to £156.20 a week with the triple lock return.
The basic state pension is available to those who turned the state pension age prior to April 2016.
It should be noted that the state pension age regularly changes and will increase to 67 between 2026 and 2028.
However, experts are warning that the state pension no longer covers the “basic standard of living” despite this triple lock boost.
This comes after the Pension and Lifetime Savings Association updated its Retirement Living Standards to factor in inflation.
The group found that the minimum lifestyle required for pensioners to live happily has increased by 18 percent.
It has gone up from £10,900 per year to £12,800 for a single person and jumped by 19 percent from £16,700 to £19,900 for couples.
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In light of this, Helen Morrissey, a senior pensions and retirement analyst at Hargreaves Lansdown, shared what pensioners need to do to boost their income.
She explained: “It shows the hugely important role workplace pensions have to play in safeguarding peoples’ retirement resilience.
“The new state pension – due to rise to £10,600 from April – does not cover even a basic standard of living for a single pensioner, so further savings are important to help them meet their day-to-day costs.
“If you are in a couple, then the new state pension gives you enough for a basic standard of living though it’s worth saying if they are older pensioners on the basic state pension then they could still have a shortfall.
“The reality is, if you want to enjoy life – socialise with friends or look forward to a foreign holiday – then you need to have a decent amount of money invested in a pension.”
“There are signs inflation may be past its peak and we may start to see it begin to fall back but it is clear the pressure on pensioners’ pockets looks set to remain for some time.”
A DWP spokesperson previously told Express.co.uk: “The UK state pension continues to provide the foundation for retirement planning and financial security in older age, with the full yearly amount of the basic state pension now over £2,300 higher than in 2010.
“Alongside this, Automatic Enrolment has succeeded in transforming private pension saving, with latest figures showing more than 10.7 million workers have been enrolled into a workplace pension to date and an additional £33billion, in real terms, saved in 2021 compared to 2012.”