Pensioners set to lose £13,000 in retirement thanks to inflation

·3-min read
Chancellor under pressure to bring back the triple lock for pensions, which he says he will reinstate next April - PETER NICHOLLS
Chancellor under pressure to bring back the triple lock for pensions, which he says he will reinstate next April - PETER NICHOLLS

Pensioners are set to lose £13,000 over the course of their retirement because of inflation, new analysis has revealed, as pressure grows on Rishi Sunak to bring back the triple lock early.

More than 12 million elderly people have suffered a £551 real-terms cut over the past year after the Government abandoned its pledge to match payouts to rising prices.

Inflation surged to a 40-year high of nine per cent last month, which would have seen households enjoy a record £822 increase.

Instead they received a 3.1 per cent cash rise, amounting to £288 or £5.55 a week, because the annual uplift had been fixed at last September’s rate.

Someone who turns 66 this year faces being £13,209 out of pocket by age 85 as a result of the lower payments.

The triple lock guarantees the state pension will increase annually by whichever is higher out of inflation, wage growth, or 2.5 per cent.

Ministers suspended the policy after salaries suddenly spiked by 8 per cent as a result of the end of the pandemic and the furlough scheme.

Treasury to reinstate triple lock next April

The Treasury says it will reinstate the pledge next April, which will see the state pension cross the £200 a week threshold for the first time.

Pensions provider Canada Life predicts inflation of 10 per cent in September will add £18.50 a week, or £967 a year, to the average payout.

But senior Tories and experts are warning Mr Sunak that bumper uplift will come too late for many elderly people who are already struggling to make ends meet.

Stephen Crabb, the former work and pensions secretary, said the Chancellor should “bring forward the state pension uprating” to take effect in October instead.

“I can’t see how he avoids doing something on Universal Credit and if he boosts Universal Credit he will need to do the same for pensioners”, he told The Telegraph.

“Some of my colleagues think he will prefer to use the council tax method again, arguing it’s actually more efficient and avoids an uprating ratchet across the board. I am not convinced.”

The Resolution Foundation urged Mr Sunak to bring forward the uprating for benefits including pensions “to support those hardest hit”.

Autumn package of support

It warned the Chancellor that emergency action was “needed to prevent this Parliament being the worst on record for living standards”.

A spokesman for the Treasury said: “We understand that people are struggling with rising prices.

“While we can’t shield everyone from the global challenges we face, we are supporting British families to navigate the months ahead with a £22 billion package of support.”

The Chancellor is drawing up a new package of support for his Autumn budget which may include quadrupling the Warm Homes Discount to £600, extending the £150 council tax rebate for homeowners in bands A to D and cutting income tax by 1p.

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