Lytham St. Anne’s pensioners in receipt of a State Pension are set for its third inflation-beating rise in a row next year. This is thanks to the ‘triple lock’ measure that guarantees a minimum level of the rate at which each year’s State Pension increase is calculated.
The triple lock sounds complicated, but it is, hopefully, easy to explain. The triple lock system means that the Government looks at three figures before announcing the increase:
- annual wage growth to July
- inflation as determined by the Consumer Price Index (CPI) in October,
- 2.5%.of increase each year.
Whichever of the three is the highest is the one that will determine the following year’s State Pension increase.
Inflation for October 2020 came in at just 0.5%, while average earnings in the three months to July 2020 actually dropped by 1%. That is why the 2.5% ‘lock’ has come into play, meaning that is how much the State Pension will increase by in 2021/22.
The New State Pension will rise by 2.5% next year. Those receiving the full New State Pension will see their weekly pay-outs increase by £4.40 per week, taking them to £179.58 per week. This means they will receive an extra £228.80 by the end of the 2021/22 tax year, which works out as an annual income boost from £9,109 to £9,337.80.
And for those on the Old State Pension in 2021/22, the weekly pension will rise by £3.40 a week, taking it to £137.65. That works out as an annual increase of £176.80, taking the annual income to a total of £7,157.17.
The table below shows the effect of the ‘triple lock’.
|How State Pension was uprated||Which part of the triple lock kicked in?|
|April 2012||5.2%||Inflation (CPI)|
|April 2013||2.5%||Guaranteed minimum|
|April 2014||2.7%||Inflation (CPI)|
|April 2015||2.5%||Guaranteed minimum|
|April 2016||2.9%||Average earnings|
|April 2017||2.5%||Guaranteed minimum|
|April 2018||3%||Inflation (CPI)|
|April 2019||2.6%||Wage growth|
|April 2020||3.9%||Wage growth|
|April 2021||2.5%||Guaranteed minimum|
2021 -2022 could see pensioners in line for a particularly large increase if workers’ wages do indeed rebound as expected. But will the ‘triple lock’ remain?