RETIREES look set to see their state pension boosted by up to £230 a year as latest inflation figures force the triple lock guarantee.
The 2.5% increase is expected to be confirmed as the consumer prices index (CPI) level of inflation for September reached 0.5%.
The triple lock ensures the state pension will rise by at least 2.5% each year.
Its calculation is based on whichever is higher out of consumer prices index (CPI) inflation, earnings growth or 2.5%.
The government has yet to officially confirm the triple lock boost.
But ministers usually uses inflation in September, and average earnings in the three months to July, to determine how much pensions go up by in April the following year.
The 12-month CPI rate for September was today confirmed as 0.5% – up from the 0.2% in August.
Experts were predicting CPI would come in at 0.4%. The latest figure is still far off the government target of 2%.
Average earnings, meanwhile, were down 1% for the three months to July – meaning the triple lock guarantee is likely to come into force.
This would be the fourth time the 2.5% triple lock has kicked in since the policy was introduced in 2011.
The full new state pension is £175.20 per week, while the previous full basic state pension was £134.25 per week.
If the triple lock comes into force, the new state pension will rise by £4.40 a week to £179.60 – an increase of £228.80 over the year.
However, the 2.5% increase is the minimum amount pensions can rise by.
Last year, the state pension went up by 3.9% as it was based on average earnings, while retirees saw a 5.2% increase, in line with CPI figures, in 2012.
Tom Selby, senior analyst at AJ Bell, said: “With Covid-19 hammering wages and pushing inflation to almost 0%, the value of the state pension triple-lock has never been clearer.
“If it were not for the policy, pensioners would likely see their state pension frozen next year.
“As it is, retirees are set to benefit from a 2.5% state pension boost in 2021/22, adding £3.40 a week to the value of the ‘old’ basic-rate state pension and £4.40 a week to the ‘new’ state pension.”
HOAR has contacted the Department for Work and Pensions for clarification on when it expects to confirm pension rises for next year and we’ll update this article when we hear back.
