In April, the UK state pension is set to rise for the second time under the ‘triple lock,’ with an expected 8.5% increase. This has sparked debates over the policy’s fairness, as it usually adjusts pensions in line with rising prices or earnings.
State Pension Overview
The state pension is a government payment given every four weeks to those who meet age and National Insurance contribution criteria. As of April 2023:
- Full, new flat-rate state pension (for those after April 2016): £203.85 per week.
- Full, old basic state pension (for those before April 2016): £156.20 per week.
In April 2024, the triple lock’s earnings link is predicted to increase the state pension to:
- Full, new flat-rate state pension: £221.20 per week.
- Full, old basic state pension: £169.50 per week.
Understanding the Triple Lock
The triple lock adjusts the state pension each April based on the highest of three measures: inflation (CPI), wage growth, or a fixed 2.5% rate. Introduced in 2010, it safeguards pension value against rising living costs and income.
Eligibility and Age
Over 12 million people receive the state pension. Age of eligibility varies; for those born between October 6, 1954, and April 5, 1960, it’s 66. Future cohorts face gradual increases to 68.
Financial Impact and Support
The state pension costs £105 billion, nearly half of the government’s benefits spending. Pensioners with no other income may qualify for Pension Credit and additional support. Winter fuel payments are also available for some.
Private Pension Changes
Recent budget changes scrapped the lifetime pension allowance, raised the annual pension allowance to £60,000, and increased the money purchase annual allowance to £10,000. These measures aim to encourage older individuals to continue working.
While these changes could boost employment by 15,000, the Institute for Fiscal Studies remains cautious about their impact on overall employment levels.
