DWP state pension could rise to £234 per week but thousands will be frozen out

Millions of people could miss out on potential increases to the state pension next year. Last week the Office for National Statistics (ONS) revealed that the UK inflation rate for May dropped to its lowest level in almost three years. The Consumer Price Index (CPI) fell to 2% down from 2.3% in April, marking the lowest level since July 2021.

This figure matters for millions of pensioners as the CPI is a key component of the triple lock, which determines the annual increase for the contributory benefit. Both the Conservatives and Labour Party have committed to uphold the triple lock policy for the next five years.

Under this policy, the new and basic state pensions rise each year by whichever is the highest of average annual earnings growth from May to July, CPI in the year to September or 2.5%. To stay updated with the latest money-related news, sign up for our twice-weekly newsletter here.

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Currently, the earnings growth for February to April stands as the highest measure at 5.9%. However, it's the upcoming announcement due in August that will be used in the triple lock.

Regardless of the measure used, around 450,000 retirees will not receive the uprating in April 2025, reports the Daily Record. If the current measure of earnings growth (5.9%) is used, approximately 2.7 million people on the full new state pension could see their weekly payments increase from £221.20 to £234.45 - equating to some £937.80 every four-week pay period.

Similarly, around 9.7 million people on the full basic state pension could see their weekly payments rise from £169.50 to £179.65 - amounting to some £718.60 every four-week pay period.

While the increase will be a boost for pensioners across Great Britain, close to half a million individuals will not benefit from it due to having retired abroad in countries lacking a reciprocal agreement with the UK Government. Despite meeting the necessary National Insurance contributions before retirement, these pensioners have their State Pensions frozen at the rate it was when they emigrated.

The 'End Frozen Pensions' campaign, spearheaded by the International Consortium of British Pensioners, is fighting to rectify what they call the "injustice of pensions for Britons who have moved abroad" and are excluded from the annual increase.

The movement represents British retirees affected by 'frozen pensions' including former nurses, firefighters, police officers, public servants, and military veterans. Campaigners are raising the alarm that many of these individuals are now facing poverty despite having paid their National Insurance contributions in full.

The End Frozen Pensions campaign said: "They moved, often to be near family, to live in one of the countries without a reciprocal agreement to inflation link their State Pension, so their pension is 'frozen' at the level it was at when they left the UK.

"Those in countries with reciprocal agreements are unaffected so if you were a pensioner in the USA you would continue to get an uprating, but if you lived just across the border in Canada you would not. We believe this is deeply unfair and arbitrary and penalises hard working Britons."

To illustrate the disparity between state pensions for those residing in the UK and those in a non-reciprocal agreement country, a 90 year old pensioner who has spent their retirement in a 'frozen country' will receive a state pension of merely £43.60 per week - if they had remained in the UK, they would be receiving £169.50.

Campaigners also highlight that the highest numbers of affected state pensioners reside in some of the largest Commonwealth countries such as Australia and Canada. Retired expats in the European Economic Area (EEA) will continue to receive annual increases to their state pensions under the Triple Lock, as will those in a range of other countries including the Philippines and Turkey. An online petition on the End Frozen Pensions website has already garnered over 20,760 signatures of support.

New State Pension payment rates 2024/25

• Full payment rate: £221.20

• Every four-week pay period: £884.80

Basic State Pension payment rates 2024/25

• Category A or B Basic State Pension (full rate): £169.50

• Every four-week pay period: £678.00