State pension: Retirees set for huge boost with payments set to rise by £700
Britons are set for a huge cash boost with retirees entitled to an extra £700 as the state pension continues to rise
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Britons are set for a huge cash boost with retirees entitled to an extra £700 as the state pension continues to rise.
The triple lock system uprates state pension by the highest out of inflation, wages or 2.5 per cent - and if inflation remains high then the state pension could increase to £11,342.
One finance expert has said that if the triple lock is maintained projections show that Consumer Prices Index (CPI) inflation may sit around 7 per cent this autumn.
Alice Guy, the head of pensions and savings at Interactive Investor, said the boost would happen if inflation stays at this percentage in September.
The triple lock system uprates state pension by the highest out of inflation, wages or 2.5 per cent
PAThe triple lock system was temporarily suspended during the pandemic because of distortions in wage growth but was reinstated in April this year when pensioners were given a 10.1 per cent increase.
The latest top up comes after a record rise in the state pension for the 2023-24 financial year.
Payments rose by almost £1,000 due to the 10.1 per cent inflation rate.
Guy said the state pension "forms the backbone" of most people's pension income and a rise in the state pension will be a "lifeline" to "many people on the breadline."
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She said: "Pensioners could be due another bumper state pension hike next year, with inflation proving a much tougher nut to crack than the Bank of England hoped.
"Their May forecast predicts inflation will fall slightly from its current rate of 8.7 per cent to 7 per cent in September, the key date for deciding the state pension for next year."
Guy described pensioners as "one of the most vulnerable groups" to rising prices as they have "limited options" to boost their finances.
The expert urges people with elderly relatives on low incomes to check if they can receive any benefits.
State pension payments are set to rise significantly due to high inflationFlickrHowever, some warn the anticipated large increase for a second year in a row could lead to the Triple Lock pension pledge being scrapped after the next election.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown said: "Brought in over a decade ago to make sure pensioners received decent State Pension increases, the Triple Lock has also been criticised in recent years for being inter-generationally unfair.
"The time has come for a review of the State Pension and the Triple Lock’s role within it to make sure it remains fit for purpose."
A Department for Work and Pensions (DWP) spokesman added: "As is the usual process, the secretary of state will conduct his statutory annual review of benefits and state pensions in the autumn, using the most recent prices and earnings indices available."