State pension triple lock confirmed with 10.1% rise to £10,600

Chancellor Jeremy Hunt has delivered on the government’s triple lock pledge, confirming a 10.1 per cent increase in state pensions for the UK’s elderly population in April.

He averted a furious backlash by giving those on the full rate an increase from the current £185.15 a week to around £203.85, or an annual income of £10,600.

Older people with a basic pension of £141.85 a week – supplemented by additional entitlements if earned during years of service – are given an increase to around £156.20 a week or £8,120 a year.

The triple lock commitment means that the state pension must increase each year with the highest price inflation, average income growth or 2.5 percent.

But Prime Minister Rishi Sunak sparked anger when he was chancellor by scrapping the income element of the state pension increase last April as wage growth was temporarily disrupted by the pandemic.

Instead, retirees got a 3.1 percent increase, using the inflation rate from the previous fall before it started to rise.

In the political chaos of recent months, Liz Truss’s short-lived government and Sunak’s new regime have sent mixed messages about whether they would implement the full 10.1 percent increase tied to September’s inflation rate.

The financial struggle many people currently face to pay their household bills was highlighted by a further rise in headline inflation to 11.1 percent last month.

The Treasury said: ‘Working age benefits will rise by 10.1 per cent, boosting the finances of millions of the UK’s poorest people, and protecting the triple lock, meaning pensioners will also see an increase in receive the state pension and the pension. credit in line with inflation.”

Pension credit, which currently supplements weekly income to a minimum of £182.60 for singles and £278.70 for couples, will also rise 10.1 per cent in April.

Steven Cameron, director of pensions at Aegon, said: “Retirees can breathe a sigh of relief after a thrilling rollercoaster ride of past disappointments, new promises and a series of turnarounds.

But next year’s increase could be his “last gasp” as the current formula looks increasingly unsustainable.

“Financially it will not have been an easy decision for the government looking to fill a £50bn fiscal black hole – each 1% increase in state pensions costs around £0.9bn a year.

“And that is not paid from some fund that has been built up in the past, but from the national insurance schemes that are paid for by today’s workers.”

Cameron adds: ‘The government will no doubt have weighed up the reaction of retired voters if they were to scrap the triple lock for a second consecutive year ahead of the next general election.’

Chris Noon, partner at Hymans Robertson, says: ‘There is a welcome relief that the government has kept its manifesto promise and kept the triple lock that provides long-term protection pensions.

“As the cost-of-living crisis and rising inflation continue, too many retirees continue to live on extremely low incomes, leading to growing concerns for many.

The state pension in the UK is one of the worst in the OECD and is the main reason the UK has such a high pensioner poverty rate.

“In the long term, the triple lock offers a mechanism to increase the state pension compared to other rich countries and must be maintained for the long term.”