The increase in state pensions will be “greater than predicted,” yet half a million people will be left out.
INFLATION in the United Kingdom is continuing to climb as a result of the present energy crisis, and rising inflation will raise the value of the state pension. However, half a million individuals will be unable to benefit since their wages have been frozen.
The value of the state pension will rise by the rate of inflation or 2.5 percent, whichever is higher, for the coming year, with inflation being the criterion. However, it is expected that inflation would rise above 4%, giving retirees a significant increase in their weekly income.
The government chose to suspend the state pension triple lock for the 2022/23 tax year in order to avoid a significant increase in the value of the state pension, but based on the most recent inflation forecasts, it looks that their efforts to keep the state pension low will be failed.
The triple lock on the state pension is a government guarantee that the value of the state pension will increase every year by the higher of three values: inflation, average earnings growth, or 2.5 percent. This is done to help pensioners in the United Kingdom keep their purchasing power over time.
However, because to the economic impact of the COVID-19 epidemic, average earnings growth was expected to reach extraordinarily high levels this year, maybe exceeding 8%, implying a significant rise in the state pension.
As a result, the government has decided to temporarily suspend the state pension triple lock for the coming year, removing the average earnings growth component and thereby creating a “double lock,” with the higher of inflation and 2.5 percent now determining state pension value.
The decision enraged retirees and violated a manifesto promise made during the 2019 election, however it looks that retirees would still see a significant boost in their state pension income due to inflation.
Inflation increased by 3.2 percent in the year to August, up from two percent in the previous month, which is the Bank of England’s target rate. This is the greatest month-to-month increase ever recorded.
The amount of the state pension will be determined by the rate of inflation for the year ending in September, which will be released next month. “Brinkwire News Summary.”