Does the State Pension increase every year?

p00hsticks

brewerdave said:

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.

But there are many under the old scheme who get also get additional (SERPS/S2P) payments  and so get more than the basic amount.

From https://www.gov.uk/government/statistics/dwp-benefits-statistics-february-2021/dwp-benefits-statistics-february-2021

At August 2020 the average (mean) weekly payment for people receiving State Pension was £154.74, an increase of £6.12 since August 2019.

The nSP average (mean) weekly payment was £164.10 (including any Protected Payments).

ErinGoBrath

NedS said:

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.

They could adjust the income increase by removing the distortion caused by Covid. A bit like the seasonally adjusted unemployment figures we had years ago.

Thrugelmir

brewerdave said:

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.

Public sector workers contribute 2% more in employees national insurance for the benefit of the higher state pension. Wasn't a totally free giveaway. 

ErinGoBrath

Thrugelmir said:

brewerdave said:

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.

Public sector workers contribute 2% more in employees national insurance for the benefit of the higher state pension. Wasn't a totally free giveaway. 

As did private sector workers in contracted in DB schemes or CIMPS.

t0rt0ise

Silvertabby said:

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.

Does it bother you so much that somebody might get a better pay rise than you? Can't you be glad that the elderly, many of them relying on the state pension for their income, get a higher percentage of their lower income than you?

nigelbb

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. 

You are obviously not a pensioner. Those of us in receipt of the stat pension think that the triple lock is great. The full pension at £9,100 is one of the lowest in Europe. The intention of the triple lock is over the years to gradually raise the value of the pension. 

nigelbb

MaxiRobriguez said:

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.

The intention of the triple lock is not just to match cost of living increases but over the years to gradually increase the value of the state pension.

Silvertabby

t0rt0ise said:

Silvertabby said:

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.

Does it bother you so much that somebody might get a better pay rise than you? Can't you be glad that the elderly, many of them relying on the state pension for their income, get a higher percentage of their lower income than you?

You miss my point.  Mr S and I are both retired - he is in receipt of his State pension, and I will get mine next year - and so would indeed immediately benefit from an inflation busting increase.

But it wouldn't be right for us to financially benefit from Covid fall-out when so many other people are struggling.

MaxiRobriguez

nigelbb 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. 

You are obviously not a pensioner. Those of us in receipt of the stat pension think that the triple lock is great. The full pension at £9,100 is one of the lowest in Europe. The intention of the triple lock is over the years to gradually raise the value of the pension. 

Clearly I'm not. Of course those in receipt of the pension think the triple lock is great, that's what it's designed to be for you.

Whilst the full state pension may be one of the lowest, the answer should be to set it at a level that is right and fair, and then apply inflation thereafter. The difficulty with that approach is that if the state pension did rise then the wealthiest in society would be getting an even bigger slice of the national wealth pie which is already too slanted in your favour, and that after a life time of having benefits that generations since haven't been given. That act would make it very obvious to those still in work just how unfair the situation is, and so instead politicians choose to give you your annual bribe to keep it the wealth disparity somewhat under the radar. 

I'm not against state pension increases. I tend to agree that some of the poorest pensioners could do with a better state pension. But, and it's a big but, it cannot be done unilaterally without considering the needs of the rest of the population, who frankly are paying through the nose for the fortune and sometimes largess of the not-so-poor pensioners. If state pension goes up, then tax rises for wealthy pensioners must be introduced. 

cfw1994

MaxiRobriguez said:

nigelbb 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. 

You are obviously not a pensioner. Those of us in receipt of the stat pension think that the triple lock is great. The full pension at £9,100 is one of the lowest in Europe. The intention of the triple lock is over the years to gradually raise the value of the pension. 

Clearly I'm not. Of course those in receipt of the pension think the triple lock is great, that's what it's designed to be for you.

Whilst the full state pension may be one of the lowest, the answer should be to set it at a level that is right and fair, and then apply inflation thereafter. The difficulty with that approach is that if the state pension did rise then the wealthiest in society would be getting an even bigger slice of the national wealth pie which is already too slanted in your favour, and that after a life time of having benefits that generations since haven't been given. That act would make it very obvious to those still in work just how unfair the situation is, and so instead politicians choose to give you your annual bribe to keep it the wealth disparity somewhat under the radar. 

I'm not against state pension increases. I tend to agree that some of the poorest pensioners could do with a better state pension. But, and it's a big but, it cannot be done unilaterally without considering the needs of the rest of the population, who frankly are paying through the nose for the fortune and sometimes largess of the not-so-poor pensioners. If state pension goes up, then tax rises for wealthy pensioners must be introduced. 

Just curious....how many of your bills increased by inflation or less?
Very few, I would imagine.  One of the biggest is often the Council Tax: ours went up around 6% this year.....our broadband is <CPI +3.9%> (Plusnet, often seen as one of the slightly better of the companies, although I will look closer at that for the next renewal).  
Since pensioners have little opportunity to "increase their lot", on balance, I would say the triple-lock is as fair as it needs to be.   A bribe?   Not really - can you see any political party messing overly with it?
& no, I am over 10 years from receiving it too, so helping fund it!