Pensioners will see a sizable increase in their state pension payments from next month as the triple lock policy has been reinstated. State pension payments are increasing by 10.1 percent for both the basic state pension and new state pension from next month.
The 10.1 percent uprating will come into effect from the new tax year, on April 6, providing a welcome income increase for pensioners as many household bills also go up next month.
The full basic state pension currently pays £141.85 a week while the full new state pension is £185.15 a week.
With the increase, the full basic state pension will go up to £156.20 a week while the full new state pension will increase to £203.85 a week.
This means those on the full new state pension will receive more than £10,000 in payments over the course of a year.
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Chancellor Jeremy Hunt announced in last year’s Autumn Statement the triple lock policy would be reinstated for this year’s state pension increase.
The policy guarantees the state pension increases in line with the highest of 2.5 percent, the rise in average earnings or inflation.
As such, state pension payments are increasing by 10.1 percent in line with last year’s September figure for inflation.
Many analysts are predicting the triple lock may not last for many more years as the yearly payments increases become unsustainable.
Andrew Tully, technical director for Canada Life, has called for a “sensible debate” about the future of the triple lock.
He said: “This may also be an opportune time to consider the longer-term future of the state pension triple lock.
“Any changes would be hugely controversial. But it’s worth remembering the state pensions of today’s retirees are paid for from the tax receipts of today’s workers.
“So there should be a sensible debate around the intergenerational fairness and affordability of the state pension in its current format.”
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A couple appeared on a recent episode of Martin Lewis’ ITV show to share their story of how they paid just under £1,000 in contributions and are now set to receive an extra £11,500 in payments.
Mr Lewis encourages Britons aged 45 to 70 to check if they can top up their state pension and increase their payments.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, encouraged Britons to look at plugging gaps in their record if they can afford the payments.
She explained: “A full year costs around £800 and for each year bought you get 1/35th of a year’s state pension – around £275.
“This means you effectively earn your money back in around three years so it can prove very good value.”