State Pension: Expert outlines criteria to qualify
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The triple lock pledge on the state pension has been temporarily frozen by the Government in a bid to save money following the pandemic. This promise means the state pension will either go up by the rate of inflation, average earnings or 2.5 percent. Due to exponential increase to average earnings last year, the triple lock was put on hold with the state pension being increased by 3.1 percent in line with last September’s Consumer Price Index (CPI) rate of inflation. However, the rise has been very different from recent rates of inflation, as the country’s cost of living crisis worsens.
Inflation is predicted by many to reach as high as 10 percent later this year, a rise from the nine percent reported last week.
On top of this, households are currently experiencing an annual rise in energy bills of £693 with the energy price cap predicted to reach £2,800 by October.
Leading poverty experts have called on the Government to reintroduce the triple lock so the state pension rate will align with inflation in the UK.
It appears as if the Government has listened to these concerns as the triple lock is set to be reintroduced later this year.
If the rate of inflation was to hit 10 percent, new state pension claimants would see a weekly payment rise of £18.50 from April of next year.
In a speech last year, the Chancellor Rishi Sunak noted that current forecasts suggest CPI inflation will go up even further in the coming months.
Mr Sunak said: “I can reassure the House that next year, subject to the Secretary of State’s review, benefits will be uprated by this September’s CPI.
“On current forecasts, (this) is likely to be significantly higher than the forecast inflation rate for next year. Similarly, the triple lock will apply for the state pension.”
This will come as a relief to pensioners across the country who have struggled to cope with the ongoing cost of living crisis.
Steven Cameron, a pensions director at Aegon, explained: “Pensioners will be reassured by further confirmation of the government’s commitment to reinstate the state pension triple lock.
“If September’s inflation rate is 10 percent, this will mean an increase in the state pension of £18.50 per week from April 2023.”
Emma Byron, the managing director for Legal & General Retirement Solutions, noted why this decision by the Government will be “good news” for pensioners.
Ms Byron said: “As the cost of living crisis continues to bite, this decision is good news for the many people who rely on the state pension to meet their income needs.
“It does, however, serve as a strong reminder that the state pension is hard to predict.
“As a result, consumers should ensure they’ve made their own private savings provisions too, in order to ensure a good standard of living in retirement.
“We’ve seen an uptick in people withdrawing from their personal pensions early and at higher rates, potentially because incomes are under pressure.
“This is something we are monitoring closely but hopefully the reinstatement of the ‘triple lock’ will provide some reassurance and help people struggling to make ends meet.”
As it stands, the full new state pension claimants for those who are 66 or over is £185.15 per week.
To qualify for the full amount provided by the new state pension, which differs to the basic state pension, recipients must have 35 years of National Insurance contributions under their belt. Meanwhile, people normally need 30 years for the basic state pension.
The payment for retirees is usually paid every four weeks into the bank or building society account of the claimant’s choice.
Britons should expect the state pension rate to rise from April 2023, at the same time as other benefit payments.
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