Bigger payouts for all: £170 a year pension boost for 13million
MILLIONS of pensioners are to see their spending power boosted to its highest level for a quarter of a century.
The basic state pension will rise to £119.30 a week from April, Chancellor George Osborne will say
The basic state pension will rise to £119.30 a week from April, Chancellor George Osborne will announce in next week’s Autumn Statement.
The most people can get at present is £115.95 a week.
The increase of £3.35 a week will mean 13 million people will be £174.20 a year better off as a result.
The 2.9 per cent increase will be the biggest in real terms since 2001 and, as a share of average earnings, the highest since 1991.
Steve Wilkie, managing director of retirement specialists Responsible Life, said: “This is cracking news for pensioners, especially as it has been another tough year for many, with savings income still in the doldrums as a result of stagnant interest rates.”
The triple lock guarantee, introduced by the Conservative-Lib Dem coalition, pledged state pension payments would rise in line with whichever is the highest of earnings, inflation or 2.5 per cent.
The 2.9 per cent rise is linked to average earnings. Alongside the increase in the basic state pension, Mr Osborne will confirm that the starting rate for the new single-tier pension – for those who retire after April – will be around £155 a week.
The increase of £3.35 a week will mean 13 million people will be £174.20 a year better off
Over the last quarter of a century pensioners have fallen below the rest of society as average earnings have done so much better than the increases in the state pension
Pensions minister Dr Ros Altmann said yesterday: “Over the last quarter of a century pensioners have fallen below the rest of society as average earnings have done so much better than the increases in the state pension. Since 2010 we have really begun to correct that.
“We are now back to the highest level for a quarter of a century – and quite right too. Pensioners deserve to be treated much better than they have been in the past.
“They’ve done their best for society, worked hard and we owe them. This Government has restored a decent level of state pension and we have further to go. The new single-tier pension will particularly help women and the self-employed.”
Some experts say the triple lock guarantee is putting too heavy a burden on taxpayers, however, thee bill next year will be about £95billion.
The 2.9 per cent increase will be the biggest in real terms since 2001
Don’t ignore the Workplace Pension
Keith Richards, of the Personal Finance Society, said: “This 2.9 per cent rise is undoubtedly good news for pensioners but the variables used to determine the increase highlight the considerable risk that the triple-lock policy has for the public finances.
“At a time when other countries are trying to de-risk pension provision, we seem to be increasing the risk of ours which will ultimately have to be addressed, with the impact being borne by future generations.
“The new pension freedoms encourage short-term spending of pension pots, which is generating significant tax revenue for the Chancellor. This is likely to result in more retirees exhausting what savings they have too early and needing greater support from the welfare system.”