State pension rises next year – but millions of pensioners will end up losing £2,400

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State pensions across the UK are set to rise by more than 7% next year, after the Chancellor of the Exchequer confirmed the government’s ‘triple lockdown’ would be reinstated.

Rishi Sunak confirmed that the upcoming hike in April next year would be in line with the inflation rate from September 2022, which is expected to be around 7.4%, according to the Bank of England’s forecast.

Under the conditions set out in the triple-locking formula, the state pension must increase at the higher of average income growth, 2. per cent, and inflation. However, this year it has been suspended due to skewed earnings growth due to the coronavirus pandemic, reports The Mirror.

Read more: Thousands of grandparents miss £2,340 pension payment – ​​how to get it

If implemented, it would have resulted in an increase of more than 8% for retirees struggling with a rapidly rising cost of living crisis. Instead, it will rise just 3.1% on April 11. Mr Sunak forecast the increase on Monday, telling MPs the triple lock mechanism for determining annual pension increases would be reinstated until at least 2024.

The Chancellor told the Commons Treasury Committee: ‘The triple lockdown will work as it normally does.



Chancellor of the Exchequer, Rishi Sunak

If inflation reaches 7.4% in September, it will rise to £198.85 per week. This would increase the annual payment from £9,627.80 to £10,340 per year, the biggest increase ever.

However, not all retirees will reap all the benefits. This is because the new state pension is only paid to people who retired after 6 April 2016.

This means any male born before April 6, 1951 and females born before April 6, 1953.

Those who retired before this date receive the old state basic pension instead. If increased by 7.4% in 2023, that would mean £152.35 per week, which equates to £7,922 per year. That’s £2,418 a year less than new pensioners.

From Monday April 11, the state’s new full pension will increase by £185.15 a week, an increase of just 3.1%, due to the triple lockdown downgrade. The old basic state pension will pay a maximum of just £141.85 a week, or £7,376.20 a year.

MP Harriett Baldwin asked the Chancellor: ‘For pensioners this year, are you guaranteeing triple lockdown again?’

Mr. Sunak replied: “Yes.” Asked what the Treasury planned for the pension increase, he added: ‘It will be whatever the consumer price index estimated in September – around seven per cent.’

Treasury official Dan York-Smith, appearing alongside the Chancellor, pointed out that the official CPI inflation forecast for September was 7.4%. Mr Sunak also defended his recent spring statement following widespread criticism that he has failed to address the worrying cost of living crisis.

He said “irresponsible” levels of borrowing risked fueling inflation even further, adding to pressure on living standards.

Is the increase in state pensions sufficient? Let us know in the comments section below

He said: “We already expect to borrow over the coming year around 60%, more as a percentage of GDP than our post-war average, 20% more as a percentage of GDP than we had planned to borrow in October, so this is already a significant amount of borrowing.

“My view is that borrowing too much is not the responsible thing to do.”

Mr Sunak said: “If anyone’s view is that the government can or should give everyone back for inflation – especially inflation at these levels caused by global supply factors – so it’s something that I don’t think is doable.”

He said “irresponsible” levels of borrowing risked fueling inflation even further, adding to pressure on living standards. Mr Sunak said his plan to cut the basic income tax rate from 2024 would inject “discipline” into the debate over government spending levels.

He added: “Now having something to aim for means that hopefully we can have a more disciplined conversation about additional public spending at this stage, which is already at very high levels. My priority at this stage is to continue to cut taxes, not increase public spending.”

His remarks followed a new warning from the Governor of the Bank of England, Andrew Bailey. He said: “This is truly a historic shock to real incomes. The energy price shock this year will be larger than every year in the 1970s.”

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