The State Pension will increase by 3.1% in 2022/23, in line with September’s Consumer Prices Index (CPI) inflation figure, after the government suspended the triple lock, saving the Treasury in the region of £4 bn as a result.
This means the basic state pension will increase by £4.25, from £137.60 per week to £141.85 per week, and the flat-rate state pension will go up by £5.55, from £179.60 per week to £185.15 per week.
If the earnings element of the triple-lock had been retained, the state pension could have increased by 8.3% next year. This would have increased the basic state pension to £149 per week and the flat-rate state pension to £194.50 per week.
This will ‘cost’ someone in receipt of the full flat-rate state pension £9.35 a week in retirement income – or £486.20 over the course of the year.
What this also reminds us all is that the State Pension, while valuable as a retirement income foundation, remains uncertain and subject to the whims of politicians – with both the amount you receive and the age you receive it subject to significant reform over the last decade.
It therefore remains crucial that anyone wanting control over their retirement and a standard of living above the basic minimum covered by the state pension saves as much as they can as early as they can – taking advantage where possible of employer contributions, tax relief and allowing compound growth to work over the long-term.
Although pensioners may be disappointed, it should be remembered this is still the third-highest increase since the triple lock was introduced in its current form over a decade ago.
An 8.3% earnings-based increase would have created a £7.5bn annual bill paid for from the National Insurance of today’s workers.
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