EXCLUSIVE: State pensioners are in line for up to £192 per week.
The DWP is set to hand out more to state pensioners (Image: Getty)
Older state pensioners are in line for a boost to their state pension worth approximately £374 a year. That’s because forecasts for the Triple Lock – still confirmed to remain in place for 2027 – show that the benefit is currently set to increase by 3.9% in April 2027.
The old state pension was closed off as of April 2016. It means that state pensioners who began to claim the DWP payments before that date were only entitled to the old state pension, while younger state pensioners first claiming after that date were given the ‘new state pension’, which distributes higher weekly payments, but no longer includes some elements like Additional Pension (AP) payments.
The DWP has to increase the amount paid to those who receive the state pension each year due to the ‘Triple Lock’ system, which enshrines in law that everyone who is eligible for the handout from the Department of Work and Pensions must see an increase each year, either level with inflation, wage growth or by 2.5%, whichever is highest.
The triple lock, the metric increasing the payments, has been scrapped by Andy Burnham pending Parliamentary process, but the change will not be made until 2030. That means state pensioners will still get increases to their payments based on the triple lock in 2027 as planned.
Right now, wage growth is higher than inflation. Inflation sits at 2.9%, while wage growth sits at 3.9%, and while these aren’t the final figures, it looks likely that wage growth rather than inflation will be the metric used when the final triple lock is set at the next Budget later this month.
As reported by Helen Morrissey, Head of Retirement Analysis at Hargreaves Lansdown: “According to the ONS, average wage growth stood at 3.9%. We may have just over a month to wait until the relevant inflation figure is published, but it currently stands at 2.9%, so unless there’s a real surge it seems likely that the average wage figure will be used.
“Such an increase would put someone on the full new state pension on course to receive £250.70 a week from next April – up from the current £241.30 per week. Someone on a full basic state pension [the old state pension] would receive £192.10 a week – up from £184.90.
“This will be a welcome boost to pensioner incomes but even a full state pension is only ever going to cover the basics. If you want to live well in retirement, then you will need to take your pension planning into your own hands.”
But if the figures were to remain the same, it would lead to a £488 per year boost for a new state pensioner with a full National Insurance record. If wage growth drops in the following three-month period, the calculation would reduce, but if it increases, the triple lock rises yet higher.
The absolute minimum rise possible for older state pensioners is £240.37 extra per year, as this is how much the current £9,614.80 annual payments must rise if the lowest possible increase, a flat 2.5%, is the metric used to increase state pensions this year.
But for some, the boost may still not be enough to guarantee an ‘adequate retirement’.
Ms Morrissey added: “If you have a gap between what you have and what you need, then taking small actions, like boosting contributions every time you get a pay increase or a promotion could have a big impact over time.
“Your employer might also be willing to increase their contribution if you increase yours – known as the employer match – and this can also make a big difference. This steady drip feed of contributions invested over the long term can transform your retirement.
“If you’re worried that you’ve neglected your pension, then it’s important to say that it’s never too late to make a difference to your retirement.
“Take stock of what you have, and if you have any extra money to contribute, it can still make a huge difference. You can usually access money in a pension from age 55 (rising to 57 in 2028).”