State pension to rise by £460 in April but older pensioners get £107 less

Thanks to the triple lock, the full new state pension should rise to almost £12,000 from April 2025. However, this still falls well short of what's required to fund a comfortable retirement. An even bigger problem is that many won't get anywhere near the full amount.

Millons of pensioners will get thousands of pounds a year less. Some will get as little as half that sum, causing anger and confusion. What’s going on?

Under the triple lock, the state pension rises each year in line with earnings, inflation or 2.5%, whichever is highest.

Next year's increase is likely to be based on earnings, which as we learned this morning outpaced inflation to rise by 4% between May and July.

These are the three months that apply when calculating next year's triple lock increase.

If the Labour government approves the uplift, this will lift the full new state pension from £11,502 to around £11,962 a year.

That's an extra £460 in the pockets of those who get the maximum amount.

The problem is that this is nowhere near enough to fund a comfortable retirement, said SunLife chief executive Mark Screeton. "A single person needs £14,400 a year just to achieve a minimum standard of living in retirement, according to the Pensions and Lifetime Savings Association. A moderate standard requires £31,300.”

It gets worse.

Not everyone gets the full new state pension. Around nine million who retired before April 6, 2016, receive the old basic state pension instead.

They get a maximum £8,814 this year, some £2,688 below today's full new state pension. An increase of 4% would lift that to just under £9,167 next April.

That's a rise of £353. Which is £107 less than those on the new state pension will get.

The difference between the two will have widened yet again. It will be a staggering £2,795.

Many older retirees on the basic state pension feel poorly treated. Especially since the gap between basic and new state pension will continue to widen every year.

Both pensions increase by the same percentage under the triple lock but the new state pension has a higher starting point so each year's hike is worth more in cash terms.

Soon the state pension gap will top £3,000 a year. And it won't stop there.

That said, many actually do better under the basic state pension. That's because they earned additional state pension on top, such as state second pension (S2P) or state-earnings related pension scheme (Serps).

Typically, older men do better as they were more likely to work and pay national insurance (NI), building up their additional entitlement.

Older women who were much less likely to work and build NI often scrape by on a pitifully small pension.

Many are in a desperate plight but their problems are under reported in the media. I've highlighted this again and again, to little avail.

Older pensioners aren’t the only ones slipping through the net. Many on the new state pension who failed to build up sufficient NI contributions or NI credits also suffer, new research shows.

Only half the 3.5million recipients of the new state pension are paid the full amount. Around 150,000 pensioners get barely £5,000 a year.

Sarah Pennells, consumer finance specialist at Royal London, blamed gaps in their NI record. “Some had low earnings, while others were either unemployed but didn’t claim benefits, or worked abroad.”

While many can plug the shortfall by claiming means-tested top-up Pension Credit, almost a million who are eligible fail to do so.

In a further blow, they will now lose their Winter Fuel Payment, too, thanks to chancellor Rachel Reeves. That will cost them a further £200, or £300 if over 80.

And that's not the only state support pensioners are set to lose as colder weather looms. As I recently reported, some of the poorest pensioners could lose up to £900 in cost-of-living payments paid by the Tories but not under Labour.

Losing these benefits could wipe out next year's triple lock hike, leaving millions of pensioners feeling poorer in real terms.

Making ends meet in retirement is difficult enough even for those who get the maximum new state pension. For those who get less, it's a nightmare, and Labour is making it worse.

Labour isn't to blame for the gap between the new and basic state pension. That's a flaw in its original design.

The new state pension is simpler and fairer on women, but many on the basic state pension understandably feel poorly treated.

Labour can be blamed for making things worse by axing the Winter Fuel Payment for all but the very poorest. It's going to be another hard winter for many. Let's hope it's a mild one.