Does the State Pension increase every year?

molerat

You will get that plus the increments, the figures quoted are at today's values.  If you get another forecast after 6 April it will state £179.60.

sheslookinhot

MaxiRobriguez said:

JGB1955 said:

Currently the basic State Pension increases every year by whichever is the highest of the following:

• earnings - the average percentage growth in wages (in Great Britain) as reported in the 3 months before July.
• prices - the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI) as reported in September.
• 2.5%

The CPI in September 2020 (the month that the 2021/22 figures are based on) was 0.7%, earnings growth was -1%,  so 2.5% wins the day.

This just shows why the triple lock is unfair and should be ditched ASAP. 

In what way is it unfair ?

Langtang

molerat said:

You will get that plus the increments, the figures quoted are at today's values.  If you get another forecast after 6 April it will state £179.60.

Excellent, I’ve gained more pension but lost a bet. 

Thrugelmir

MaxiRobriguez said:

JGB1955 said:

Currently the basic State Pension increases every year by whichever is the highest of the following:

• earnings - the average percentage growth in wages (in Great Britain) as reported in the 3 months before July.
• prices - the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI) as reported in September.
• 2.5%

The CPI in September 2020 (the month that the 2021/22 figures are based on) was 0.7%, earnings growth was -1%,  so 2.5% wins the day.

This just shows why the triple lock is unfair and should be ditched ASAP. 

A spike in inflation in the short term wouldn't be a surprise. Given there's a cap of 2.5%. The Chancellor has made a shrewd decision for the coming year.  

MX5huggy

Thrugelmir said:

MaxiRobriguez said:

JGB1955 said:

Currently the basic State Pension increases every year by whichever is the highest of the following:

• earnings - the average percentage growth in wages (in Great Britain) as reported in the 3 months before July.
• prices - the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI) as reported in September.
• 2.5%

The CPI in September 2020 (the month that the 2021/22 figures are based on) was 0.7%, earnings growth was -1%,  so 2.5% wins the day.

This just shows why the triple lock is unfair and should be ditched ASAP. 

A spike in inflation in the short term wouldn't be a surprise. Given there's a cap of 2.5%. The Chancellor has made a shrewd decision for the coming year.  

It’s not a cap of 2.5%, that’s the minimum that the pension will go up by. It would go up by more than this if CPI is over 2.5 or earnings increase by over 2.5.

There was some discussion of furlough causing wages to fall by say 10% but pensioners would get 2,5% then the next year wages get most of the fall back say 8% so pensioners would get that 8%. So over 2 years the pension would rise 10.7% while wages fall 2.8%. 

brewerdave

MX5huggy said:

Thrugelmir said:

MaxiRobriguez said:

JGB1955 said:

Currently the basic State Pension increases every year by whichever is the highest of the following:

• earnings - the average percentage growth in wages (in Great Britain) as reported in the 3 months before July.
• prices - the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI) as reported in September.
• 2.5%

The CPI in September 2020 (the month that the 2021/22 figures are based on) was 0.7%, earnings growth was -1%,  so 2.5% wins the day.

This just shows why the triple lock is unfair and should be ditched ASAP. 

A spike in inflation in the short term wouldn't be a surprise. Given there's a cap of 2.5%. The Chancellor has made a shrewd decision for the coming year.  

It’s not a cap of 2.5%, that’s the minimum that the pension will go up by. It would go up by more than this if CPI is over 2.5 or earnings increase by over 2.5.

There was some discussion of furlough causing wages to fall by say 10% but pensioners would get 2,5% then the next year wages get most of the fall back say 8% so pensioners would get that 8%. So over 2 years the pension would rise 10.7% while wages fall 2.8%. 

But don't forget that it is a percentage rise on a figure way below average earnings - the "old" basic SP (which most current pensioners receive)  is only £137.60 per week.

Silvertabby

MX5huggy said:

Thrugelmir said:

MaxiRobriguez said:

JGB1955 said:

Currently the basic State Pension increases every year by whichever is the highest of the following:

• earnings - the average percentage growth in wages (in Great Britain) as reported in the 3 months before July.
• prices - the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI) as reported in September.
• 2.5%

The CPI in September 2020 (the month that the 2021/22 figures are based on) was 0.7%, earnings growth was -1%,  so 2.5% wins the day.

This just shows why the triple lock is unfair and should be ditched ASAP. 

A spike in inflation in the short term wouldn't be a surprise. Given there's a cap of 2.5%. The Chancellor has made a shrewd decision for the coming year.  

It’s not a cap of 2.5%, that’s the minimum that the pension will go up by. It would go up by more than this if CPI is over 2.5 or earnings increase by over 2.5.

There was some discussion of furlough causing wages to fall by say 10% but pensioners would get 2,5% then the next year wages get most of the fall back say 8% so pensioners would get that 8%. So over 2 years the pension would rise 10.7% while wages fall 2.8%. 

Now that WOULD be unfair.  If wages were to rise by 8%, with most of the increase being due to the restoration to pre furlough rates, then it would be wrong to use 8% as the 'triple lock' figure.  After all, the State pension wasn't reduced due to Covid, so there's nothing to restore.  I'm sure it's not beyond the abilities of the number crunchers to come up with a wage increase figure without the furlough restoration.

And remember that the triple lock increases don't only benefit actual pensioners, they benefit ALL of us by increasing our pension forecasts.

MaxiRobriguez

sheslookinhot said:

MaxiRobriguez said:

JGB1955 said:

Currently the basic State Pension increases every year by whichever is the highest of the following:

• earnings - the average percentage growth in wages (in Great Britain) as reported in the 3 months before July.
• prices - the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI) as reported in September.
• 2.5%

The CPI in September 2020 (the month that the 2021/22 figures are based on) was 0.7%, earnings growth was -1%,  so 2.5% wins the day.

This just shows why the triple lock is unfair and should be ditched ASAP. 

In what way is it unfair ?

Why should pensioners receive an above average pay inflation just because?

It's not fair in the best of times, let alone in a period when those in work have seen a real terms pay cut, and considering that pensioners have a bigger share of wealth as an age cohort than at any point in the past.

Lets call the triple lock for what it is - a bribe for votes.

ewaste

MaxiRobriguez said:

Lets call the triple lock for what it is - a bribe for votes.

It's a pretty dangerous populist policy at that, no Government is likely to touch it due to the political toxicity. The demographics and intergenerational wealth inequality should be clear indication to anyone why the state pension triple lock isn't exactly fair or rational. Couple that with the death of defined benefit pension provison, the freezinng and previous reductions of the LTA etc. 

Silvertabby said:

And remember that the triple lock increases don't only benefit actual pensioners, they benefit ALL of us by increasing our pension forecasts.

It will only benefit those of an age likely to do so e.g. close to, at or beyond SPA. For those with a few decades to go it's likely to have completely the opposite effect. It's like another populist policy of increasing the personal tax allowance.

NedS

Silvertabby said:

MX5huggy said:

It’s not a cap of 2.5%, that’s the minimum that the pension will go up by. It would go up by more than this if CPI is over 2.5 or earnings increase by over 2.5.

There was some discussion of furlough causing wages to fall by say 10% but pensioners would get 2,5% then the next year wages get most of the fall back say 8% so pensioners would get that 8%. So over 2 years the pension would rise 10.7% while wages fall 2.8%. 

Now that WOULD be unfair.  If wages were to rise by 8%, with most of the increase being due to the restoration to pre furlough rates, then it would be wrong to use 8% as the 'triple lock' figure.  After all, the State pension wasn't reduced due to Covid, so there's nothing to restore.  I'm sure it's not beyond the abilities of the number crunchers to come up with a wage increase figure without the furlough restoration.

But that is exactly what is likely to happen unless the Government can come up with some fudge to correct for the drop in average earnings for 2020/21 - maybe they can average the increase in earnings over the last 3 years. With millions of people furloughed and only receiving 80% of their normal earnings and many very high earners taking pay cuts or subjected to massive pay restraints, average earnings are almost certainly going to have been massively impacted in 2020/21.