State pensioners set for triple lock boost in Chancellor's October Budget
State pensioners are in line for a bumper boost to their payments from a triple lock adjustment set to be confirmed in the Autumn Budget on October 30. The State Pension is set to be increased in line with a revised figure for national pay growth, way above the 1.7 per cent September inflation reading that will be used to calculate rises for all other DWP and HMRC benefits such as Universal Credit and Personal Independence Payment.
The annual State Pension uplift is decided by the triple lock guarantee - first introduced by the Conservatives and set to remain in place under the current Labour Government – which determines it will rise whichever of these three measures is highest: average annual earnings growth, including bonuses, from May to July; the Consumer Price Index measure of inflation in the year to September; or a default minimum of 2.5 per cent.
The latest inflation data confirms that pensioners are in line for a "healthy uplift" to their total annual payment next April of around £475, taking the total for the full New State Pension to approximately £11,975. Work and Pensions Secretary Liz Kendall will make the final decisions on the rise ahead of October's Budget.
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Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: "September's CPI reading - the final component in the triple lock equation - came in significantly lower than total average pay, including bonuses, of 4.1 per cent in the three months to July. This means pensioners will enjoy a healthy uplift to their retirement income next year, a bigger increase than initially expected after average total earnings growth was revised upwards by the ONS from an earlier forecast of 4 per cent.
"While the sizeable boost may appear generous for pensioners, Labour's pledge to ditch the Winter Fuel Payment for all but the poorest retirees will certainly dull some of the cheer. Losing out on a Winter Fuel Payment of up to £300 will make it even harder for pensioners to maintain their spending power, particularly for those still struggling with the fallout from the cost-of-living crisis"
She added: "Add in frozen tax thresholds, with the full New State Pension gaining ground on the standard personal allowance of £12,570 and pensioners are edging closer to the point at which their State Pension income becomes liable for tax. Retirees already receiving a higher State Pension may already be paying tax on the benefit, while those receiving a private pension income will see more of that swallowed up by tax."
Under the 4.1 per cent earnings growth element of the triple lock, those on the full New State Pension should see payments rise by £9.10 per week from £221.20 to £230.30, while people with full entitlement to the pre-2016 Basic State Pension are set for an increase in their weekly payments of £6.95, from £169.50 to £176.45.
This will increase the annual amount of Basic State Pension from £8,814 to £9,175.40, a boost of £361.40. The maximum New State Pension will rise by £473.20, pushing it from £11,502.40 to £11,975.60 through the 2025/26 fiscal year. However, 453,000 pensioners won't see the rise because they are expats living in countries where their pension is frozen at the rate that was in effect when they emigrated.
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