State Pension payments of up to £920 each month will not be due for nearly half a million people next year
The annual State Pension uprating next April looks set to be determined by the earnings growth measure of the Triple Lock after new figures were published by the Office for National Statistics (ONS) earlier this week. Under the Triple Lock the New and Basic State Pensions increase each year in-line with whichever is the highest between the average annual earnings growth from May to July, Consumer Prices Index (CPI) in the year to September, or 2.5 per cent.
CPI for August came in at 2.2 per cent while average earnings growth for the 12 months to July fell from 4.5 per cent to 4 per cent - making it the current leading measure of the Triple Lock. While the new State Pension rates won’t be confirmed until the Autumn Budget, it’s of little comfort to nearly half a million pensioners who will not receive any uplift.
Under the latest earnings growth figure, people on the full New State Pension could see payment rise by £8.85 per week from £221.20 to £230.05 and as the payment is typically made every four weeks this amounts to £920.20. This will see annual payments rise by £460 from £11,502 to £11,962 over the 2025/25 financial year.
READ MORE: People on State Pension set for significant pay rise next April due to sticky inflation rate
Similarly, someone on the full Basic State Pension could see weekly payments rise by £6.80 per week from £169.50 to £176.30, or £705.20 every four-week payment period.
However, not all State Pensioners are set to receive the annual uprating next year. The International Consortium of British Pensioners (ICBP) advocates on behalf of around 453,000 expats affected by ‘frozen pensions’ and is behind the ‘End Frozen Pensions’ campaign, which aims to “end the injustice” for Brits who have moved abroad whose State Pension does not rise in-line with the Triple Lock every April.
In fact, many retirees now living in countries which do no have a reciprocal agreement with the UK such as Canada, Australia and New Zealand, have seen their State Pension frozen at the point of emigration. This is despite having worked and lived in the UK for most of their lives and paid their quota of National Insurance Contributions, which would entitle them to State Pension payments - if they had not relocated.
You need at least 10 years’ worth of National Insurance Contributions to be eligible to claim the State Pensions and around 35 years for the full amount, although this may be more if you have been ‘contracted out’.
However, analysis by the Canadian Alliance of British Pensioners indicates that all these frozen State Pensions could be brought in-line with the current State Pension pay rates by the new Labour Government for £50 million.
Its analysis shows that State Pension payments to frozen countries only amounts to 1.3 per cent of the UK Government’s total annual expenditure.
Graham Dodd, board member of the Canadian Alliance of British Pensioners told the Daily Record: “The Government's line is that they only uprate where there is a legal requirement to do so. The folly in this is that it is in their hands to pass the necessary legislation.
“It is true that should the UK make all the existing and future frozen pensioners whole by bringing them to the level they would have been if they had never been frozen then the cost would be £0.94 billion. However, in all previous cases of unfreezing, the UK has never made all the existing and future frozen pensioners whole by bringing them to the level they would have been if they had never been frozen.”
Mr Dodd explained that when State Pensions for expats living in the USA were unfrozen, the current annual uprating was applied to the frozen rate.
He also said that even if you take the oft-quoted £0.94bn figure needed to resolve the issue, it still amounts to just 0.7 per cent of the total 2023/24 State Pension expenditure.
He went on to explain how the actual cost to settle this for the 113,000 Brits living in Canada is £26m - 0.019% of the total State Pension expenditure of over £120bn if settled in 2024 or £11m if settled in 2025.
The figure to unfreeze all 453,000 pensioners for the current 2024/25 financial year is £49m, for 2025/26 it’s £34m and for 2026/27 it’s £35m - 0.02 per cent of total State Pension expenditure.
These figures are based on the UK Government's previous forecast for the average earnings growth measure for the Triple Lock at 3.6 per cent.
State Pension uprating predictions
The calculations below are based on the latest ONS figures using the 4.0 per cent earnings growth as the multiplier.
Full New State Pension
Weekly payment: £230.05 (from £221.20)
Four-weekly payment: £920.20 (from £884.80)
Annual amount: £11,962 (from £11,502)
Full Basic State Pension
Weekly payment: £176.30 (from £169.50)
Four-weekly payment: £705.20 (from £678)
Annual amount: £9,167 (from £6,814)
Chancellor Rachel Reeves will announce the annual State Pension uprating during the Autumn Budget on October 30.