State pension payments go up each April
The state pension is not covering basic costs for many claimants, a finance expert has warned. New figures show how much the triple lock has increased payments in recent years. Yet the benefit is still not enough to live on for many retirees.
Those on the full new state pension currently get £221.20 a week, or £11,973 a year. The full rate for the basic state pension is currently £176.45 a week, the equivalent of £9,175.40 a year. Chancellor Rachel Reeves is expected to confirm the triple lock in her Autumn Budget this week, on Wednesday, November 26. This will mean payments will go up by 4.8 percent next April.
This will lift the full new state pension to £241.30 a week, or £12,547.60 a year, while those on the full basic rate will see their rate rise to £184.90 a week, or £9,614.80 a year. Of course, many state pensioners get less than the full amount for whichever version they are on, as your state pension entitlement is based on your National Insurance (NI) contributions.
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A person typically needs 35 years of full NI contributions to get the full new amount or 30 years’ worth to get the full basic amount. Calculations by NimbleFins showed that state pensioners would potentially be £1,865 a year less if the triple lock had not boosted their pay.
The triple lock ensures payments go up in line with whichever of three measures proves to be highest: the rise in average earnings, inflation or 2.5 percent. Looking over a period of roughly 10 years, if rates had increased since April 2016 by just 2.5 percent, the full new state pension would now pay £194.39 a week, which is £35.86 a week less than the actual rate. This would mean a shortfall of £1,865 a year.
If the state pension increase had gone up in line with inflation over the same timeframe, people on the full new amount would now be paid £201.71 a week, which is almost £1,485 less than they currently get.
The triple lock has provided pensioners with considerable pay increases in recent years, including a record 10.1 percent boost in April 2023, owing to soaring inflation the year before. Yet one concern is that even with the recent pay boosts, the state pension is not enough to cover the basics for many claimants of the benefit.
Erin Yurday, CEO and founder of NimbleFins, said: “While the triple lock has raised pensions more quickly than wages in recent years, those rises are from a low baseline and still fall short of enabling a basic standard of living. Without the triple lock, pensioners would be hundreds of pounds poorer each month.”
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Calculations from Pensions UK indicate that a single pensioner needs at least £13,400 a year for a basic standard of living in retirement, which is almost £500 a year more than the full new state pension. A single person needs an income of £31,700 a year for a moderate lifestyle in retirement and £43,900 a year for a comfortable retirement, well over twice the full new state pension.
Mr Yurday said: “Our analysis shows just how vital the triple lock has been in protecting older people from inflation and rising bills. But it also highlights a deeper issue – the state pension alone is not enough to live on, and many pensioners are still struggling despite these increases.”
