Martin Lewis shares tips for boosting state pension
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Payments could increase by 10.1 percent next year if the triple lock is reinstated, with the new full state pension rising to more than £200 a week for the first time. But tens of thousands of Britons miss out on the yearly increase if they live in certain countries.
For a person’s pension to increase each year, they must live in:
- The UK
- The European Economic Area (EEA)
- Countries with a social security agreement with the UK (but not in Canada or New Zealand).
Around 520,000 British pensioners miss out on the increase as they live outside these regions, according to campaign group End Frozen Pensions.
If affected pensioners move back to the UK, their payments will then increase to the current rate.
Those who live in an EEA country or Switzerland should see their payments increase each year.
The countries inside the EEA include:
- Czech Republic
The UK also has agreements with other countries, to guarantee the social security rights of citizens who move between the two countries, such as their state pension.
Documents sometimes refer to these accords as ‘bilateral agreements’ or ‘reciprocal agreements’.
A person who lives in these countries and receives a UK state pension will normally see their payments increase each year:
- The Isle of Man
- North Macedonia
- The Philippines
The UK also has social security agreements with Canada and New Zealand but Britons who live in these countries are not entitled to the yearly increase.
The new full state pension could rise to £203.85 a week if the triple lock policy returns and the amount increases in line with inflation.
The policy guarantees the state pension rises in line with the highest of either 2.5 percent, the increase in average earnings or inflation.
New Prime Minister Rishi Sunak has yet to commit to bringing back the policy, after the earnings element was suspended last year, with payments increasing by just 3.1 percent in line with inflation.
Analysts at wealth management firm Quilter said if the state pension increases by 10.1 percent, Government expenditure to cover the bill will rise to around £9.5billion annually.
David Denton, technical consultant at Quilter Cheviot, said: “Pensioners will be hoping that the government honours its previous commitment to an inflation-based uplift next year as it will rely on the high figure released this morning.
“Not only would this result in a considerable pay rise for pensioners this year, but if the triple lock is then scrapped in subsequent years, they will at least have received this larger, potentially one-off, uprating.”
Around 12.5 million people who receive the state pension could face a real-terms cut in earnings if their payments do not rise, while prices for everyday essentials continue to soar.
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