Local independent financial adviser, Becky Hammonds of Willow Financial Solutions on how the double lock on pensions works.
The state pension will increase by up to £289 in 2022 when pensioners’ benefit will rise by 3.1% thanks to a temporary ‘double lock.’
More than 10 million state pensioners will receive a pay rise of 3.1% from April 2022, in line with the inflation rate – which could represent a boost of up to £288.60 for the year.
The 3.1% rise was confirmed after the Office for National Statistics (ONS) revealed that CPI inflation measured that amount in September 2021, down slightly from 3.2% in August.
The state pension payment is protected by a temporary ‘double lock’ this time, which means that next April it would increase by either September’s rate of inflation or a guaranteed minimum of 2.5% – whichever was higher. The ‘triple lock’ has been suspended for a year due to high earnings growth following the pandemic.
Millions of recipients of the state pension will see their payments keep up with inflation and receive a 3.1% state pension rise next year. The inflation-linked hike will exceed the guaranteed minimum rise of 2.5% that was applied to 2021-22 payments.
Pensioners who are entitled to the full new single-tier state pension will get £185.15 a week from 6 April 2022, up from £179.60. The change means pensioners will be up to £288.60 better off by the end of the 2022-23 tax year, taking their total income to £9,627.80. Pensioners that reached state pension age before April 2016 and receive the basic state pension will see their weekly pension payments rise from £137.60 to £141.85 next year. This amounts to a £221 pay rise in 2022-23, with income rising to £7,376.20 a year.
The previous State Pension triple lock ensured the some eligible retired Britons receive from the Department for Work and Pensions (DWP) rises each year. The state pension triple lock was introduced by the then coalition Government in 2010 to ensure the state pension would not lose value in real terms. State pensioners could expect to see their sum rise each year by the highest of the following factors: 2.5 percent, inflation or earnings growth. Now, the earnings growth element has been frozen.
As you can see, the State Pension provides a very basic even unsatisfactory level of income which is why it is important to save and plan ahead for your retirement.
For pensions and investment advice contact Becky Hammonds on 07969 269677 or email becky@willowfs.co.uk
