State pension payments will NOT rise for these pensioners despite scramble to secure boost


The triple lock mechanism means the UK state pension rises each year by whichever is the highest out of the average percentage growth in wages in Great Britain, the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI), and 2.5 percent. Following the coronavirus pandemic, fears have been raised by regarding the future of the triple lock system.

A slump in earnings this summer due to the COVID-19 crisis could result in a zero increase in pension payments from April 2021 under the current formula for calculating benefits.

However, in an effort to avoid this from happening, Work and Pensions Secretary Therese Coffey is to introduce a technical Bill into the House of Commons today, designed to prepare the way for a rise of 2.5 percent next year.

Ms Coffey said yesterday: “The Government has worked hard to protect all age groups during the pandemic, strengthening the welfare safety net, introducing furlough and income protection schemes, as well as supporting those who have lost their jobs back into work.

“It is only right, then, that we also ensure pensioners can see their incomes protected as we build back better.

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“In these difficult times, I want to give pensioners peace of mind about their financial health.”

Commenting on the news, Ian Browne, pensions expert at Quilter, said: “Despite the glum warnings about the prospect for jobs and the economy, the government has stuck by their manifesto commitment to maintain the triple lock and guarantee at least a 2.5 percent increase in the state pension next year.

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“Given both earnings growth and inflation will be around or below one percent next year, the triple lock will guarantee a 2.5 percent increase in the state pension next April, which means recipients of the individual full basic state pension will receive £7,155.53 a year, up from £6,981 this year and recipients of the new style state pension will receive £9,338.16 a year, up from £9,110.4.

“This is despite the fact that inflation is predicted to remain low, or perhaps even negative, for some time to come and average earnings growth will remain subdued given the gloomy employment environment resulting from Covid-19.

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“There is a danger that guaranteeing a 2.5 percent boost to the state pension is perceived to be intergenerationally unfair, given it will provide a considerable boost to pensioners’ income when many others are taking a cut in their pay, working less hours or have lost their jobs altogether.

“But even more contentious is the fact that once the furlough scheme ends later this year and if wages recover, in its current form the triple lock will provide an artificially large boost to state pension income in 2022/23 when we could be in the clasp of a deep recession and when the government is struggling to control the deficit.

“Once wages recover next year, average earnings growth is expected to bounce back to create a one-off spike in wage growth, estimated to be as high as five percent. This will increase the full basic state pension to £7,513.30 a year in 2022/23 year, and the new style state pension to £9,805.07 a year.

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“As such, the triple lock will no longer provide a link between the real economy and increases in the state pension. The eight percent boost in state pension income over two years will come at a time when real economy metrics including earnings, employment, growth and inflation are flat.”

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Those who live outside of these countries will not get the yearly increases.

Should a person return to live in the UK, their state pension will go up to the current rate.

If a person is already retired and they’re thinking of moving abroad, they’re directed to contact the International Pension Centre if they want advice on how their pension may be affected.





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