State Pension up 4.1% Despite Inflation 1.7% pa

Inflation in the UK for September was published by the Office for National Statistics yesterday at 1.7% pa.

See CPI 1.7% RPI 2.7%

Consumer Prices Index (CPI) inflation in September sets the rate for many benefit increases in the UK for the following April.  This means that many benefits will increase by 1.7% next April.

State Pension Triple Lock

The State Pension is different to other benefits in that for some time it has been used as a ‘political’ divider or even a ‘vote grabber’ in that currently, pensioners have a government guarantee for state pension increases as the higher of

• CPI Inflation (previous September).
• Wages Inflation (previous May to July).
• 2.5% pa.

Wages inflation for May to July 2024 was 4.1% pa meaning that assuming the new Labour government confirms the ‘triple lock’, State Pensions should increase by 4.1% in April 2025.

• The full UK State Pension is currently £221.20 per week.  That’s £11,502.40 pa.
• With a 4.1% increase, full UK State Pension should increase to £230.27 per week.  That’s £11,974 pa.  That’s a £471.60 increase pa.

Comment

Given the withdrawal of the winter fuel allowance for all those not on pension credits or other means tested benefits that were payments of either £200 or £300 last year plus ‘cost of living’ payments, we cannot see the new Labour government withdrawing the triple lock too.

That said, for many non-pensioners, workers (with investments) and business owners, facing huge tax increases in the coming budget on 30^th October 2024, it may be a little ‘sickening’ that, as a nation, we should all share ‘the pain’ and not just ‘those that have’ albeit either by inherited wealth, or in many personal cases, by working 5-7 days a week to make their job, investment property or business work, not for us, but for all their families, staff and clients alike.  We all assume MPs will still get their full expenses on their London homes.

We should all share the pain.