THE exact amount the state pension will rise by is set to be confirmed in a matter of weeks and it’ll be more than first thought.
Fresh figures out today have indicated that annually, payments will go up by £473 – not £460.
This is due to revised statistics being released this morning revealing that growth in employees’ average total pay was 4.1% in the three months to July – not 4%.
It comes as Chancellor Rachel Reeves has confirmed that she will announce how much payments will increase by in the Budget on October 30.
Just this extra 0.1% adds around £100million to the state pension bill under the triple lock formula.
That’s because the triple lock system sees the state pension rise in line with whatever is highest out of: wages for May to July, 2.5% or September’s inflation figures.
The UK’s rate of inflation remained at 2.2% in August after rising to the same figure the month before.
With inflation highly unlikely to rise above 4.1% in September, it means the state pension is now expected to rise from £11,502.40 to £11,975 per year – a £473 boost.
Although, this will not be confirmed officially until tomorrow when the previous month’s rate is announced.
Weekly it will mean a rise from £221.20 to £230.30 for those on the full new state pension. A £9.10 increase.
Meanwhile, older pensioners who retired before April 2016 will see their weekly payment rise from £169.50 to £176.45 – an increase of £6.95.
Annually, it’s a rise from £8,814 to £9,175 – which means payments will go up by £361.
Although it’s worth noting, people on the old system who also have “additional” state pension (SERPS) will see that part of their pension rise only in line with inflation which hasn’t been published yet.
Commenting, Steve Webb, partner at LCP said: “A slightly higher rate of increase is welcome for pensioners, though will be an unwelcome £100m extra cost for the Chancellor as she prepares her Budget.
“The rate of the new state pension will now be close to £12,000 per year, very near to the £12,570 tax-free personal allowance.
“This is likely to put extra pressure on the Chancellor to take action on tax allowances in the coming years.”
The state pension is increased each year in line with the triple lock mechanism, which all major political parties committed to before the general election in July.
It comes after the Chancellor came under fire for her decision to cut winter fuel payments.
The benefit, worth up to £300 this winter, will only be available to those on certain means-tested benefits, including pension credit, leaving 10million state pensioners worse off.
But the Chancellor defended the move and saying that pensioners will be £900 better off, telling reporters again this week that: “I will announce the increase in next year’s state pension at the Budget, but it’s likely to be in the region of £450 more next year.
“So you can see, because of the commitment to the triple lock, the state pension will go up by more than winter fuel every year, I think it’s set to go up by £1,700 during the course of this Parliament.”
AT the moment the current state pension is paid to both men and women from age 66 - but it's due to rise to 67 by 2028 and 68 by 2046.
The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age.
But not everyone gets the same amount, and you are awarded depending on your National Insurance record.
For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings.
The new state pension is based on people’s National Insurance records.
Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension.
You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit.
If you have gaps, you can top up your record by paying in voluntary National Insurance contributions.
To get the old, full basic state pension, you will need 30 years of contributions or credits.
You will need at least 10 years on your NI record to get any state pension.
State pension payments increase every April.
This year, the full rate of the new state pension rose from £203.85 a week to £221.20 – rising 8.5% in line with last September 2023’s wage growth.
This equates to £11,502.40 in total over a year.
This is what the state pays those who reach state pension age after April 6, 2016.
The amount of new state pension you receive depends on your National Insurance (NI) record throughout your adult life.
If you have made at least 35 years of qualifying NI contributions or NI credits you may qualify for the maximum amount.
You can get NI credits if you’re caring for a relative or raising children instead of working, for example.
You won’t automatically get the state pension – you need to claim it once you’re eligible.
You should receive a letter no later than two months before you reach state pension age, explaining what to do.
You can find out more here.
You can choose to defer getting the state pension – you don’t have to take it as soon as you are eligible when you reach state pension age.
Leaving your state pension untouched can boost the amount you eventually get.
If you opt to defer your state pension, your entitlement increases by the equivalent of 1% for every five weeks you do so.
As the state system can be tricky to navigate, a key part of any pension planning involves requesting a state pension forecast.
This will help you get your head around how much you could be eligible to receive, and from what age.
DON'T know where to start? Here are some tips from financial provider Aviva on how to get going.
