Does the State Pension increase every year?

MaxiRobriguez

cfw1994 said:

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!

I think all of my bills increased by more than inflation this year.

We can argue the appropriateness of the triple lock forever but almost every data set you look at shows wealth concentrating in the elderly more than ever before with life chances of the young weaker than than it has been since gruel was a staple, and so giving above average inflation payrises to those people in a year when working people's income fell is, frankly, infuriating. 

https://www.newstatesman.com/politics/uk/2021/02/david-willetts-idea-young-people-are-getting-raw-deal-now-widely-accepted

zagfles

Silvertabby said:

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.

Yes, the flaw in the way the triple lock works is that it's done on a year on year basis. So if for example average earnings fell 10%, inflation was 0%, the state pension would go up 2.5%. If the following year, average earnings rose 10%, the state pension would go up 10%. So there hasn't been any increase in average earnings over the 2 years, but purely because average earnings temporarily dipped, the state pension rises massively!

It would be more sensible to move to an index basis, so all 3 indices representing the triple lock start at 100, the 2.5% index will simply rise 2.5% every year, the inflation and earnings ones will rise (or fall) with changing prices/earnings, and whichever index is higher at the time is the one used.

LateStarter

MaxiRobriguez said:

 every data set you look at shows wealth concentrating in the elderly more than ever before with life chances of the young weaker than than it has been since gruel was a staple, and so giving above average inflation payrises to those people in a year when working people's income fell is, frankly, infuriating. 

Please stop with the "wealth is concentrated in the elderly" line, The reason some of them have more is they've worked 40 or 50 years to earn it, and managed to save some of what they worked for. Would you really expect your financial outlook to be the same at 35 as at 65?

MACKEM99

Out of interest what is the "actual" weekly increase in monetary terms of the pension taking into account the triple lock verses the actual increase in monetary terms of average wages?

MaxiRobriguez

LateStarter said:

MaxiRobriguez said:

 every data set you look at shows wealth concentrating in the elderly more than ever before with life chances of the young weaker than than it has been since gruel was a staple, and so giving above average inflation payrises to those people in a year when working people's income fell is, frankly, infuriating. 

Please stop with the "wealth is concentrated in the elderly" line, The reason some of them have more is they've worked 40 or 50 years to earn it, and managed to save some of what they worked for. Would you really expect your financial outlook to be the same at 35 as at 65?

Stop ignoring the problem by deliberately misrepresenting me. I said wealth is concentrated in the elderly more than ever before. 

Did you even bother to read the link shared? Or did you ignore that as well as it makes you feel uncomfortable that your generation got lucky rather than "earned" it? Because that's what it was - luck. Right place, right time. You haven't worked harder than any other generation on average but you got a tonne of perks no other generation was offered. Congratulations.

Here's some more if you have a change of heart:

Home wwnership: https://www.theguardian.com/money/2020/feb/10/home-ownership-ons-rent
Earnings: https://www.cnbc.com/2019/09/19/how-much-millennials-earn-compared-to-their-parents.html
Pensions: https://citywire.co.uk/funds-insider/news/baby-boomers-vs-millennials-theres-no-contest/a800544

Andy_L

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.

it served a useful purpose of ratcheting the state pension back up after the effects of 20(?) odd years of increasing it in line with inflation rather than wages as it used to be. Whether that's still necessary is arguable

MACKEM99

Yes they did have things not seen now:
TB
Diphtheria
Rickets
Not from good living.

cfw1994

MaxiRobriguez said:

LateStarter said:

MaxiRobriguez said:

 every data set you look at shows wealth concentrating in the elderly more than ever before with life chances of the young weaker than than it has been since gruel was a staple, and so giving above average inflation payrises to those people in a year when working people's income fell is, frankly, infuriating. 

Please stop with the "wealth is concentrated in the elderly" line, The reason some of them have more is they've worked 40 or 50 years to earn it, and managed to save some of what they worked for. Would you really expect your financial outlook to be the same at 35 as at 65?

Stop ignoring the problem by deliberately misrepresenting me. I said wealth is concentrated in the elderly more than ever before. 
Did you even bother to read the link shared? Or did you ignore that as well as it makes you feel uncomfortable that your generation got lucky rather than "earned" it? Because that's what it was - luck. Right place, right time. You haven't worked harder than any other generation on average but you got a tonne of perks no other generation was offered. Congratulations.

Here's some more if you have a change of heart:

Home ownership: https://www.theguardian.com/money/2020/feb/10/home-ownership-ons-rent
Earnings: https://www.cnbc.com/2019/09/19/how-much-millennials-earn-compared-to-their-parents.html
Pensions: https://citywire.co.uk/funds-insider/news/baby-boomers-vs-millennials-theres-no-contest/a800544

Luck.   
Plays a part, for sure.
I'd say most who live on our Island got lucky by simply being born here.  I cannot imagine a life growing up in Syria, or Myanmar, or <insert choice of many places on the planet with dreadful life chances>.
Also...I have often seen that the harder people work, sometimes the luckier they get.
In a lot of cases, where those elderly do have some excess wealth (which is by no means a large majority, I would suggest, other than perhaps they have a roof over their heads), so those people help out the younger in the family.   

wealth is concentrated in the elderly more than ever before.  

Perhaps.   
Wealth in general is perhaps concentrated in a minority more than ever before, I would suggest. 
People (generally) are living longer than ever before, with fewer of the old diseases wiping them out.   Covid might have addressed that imbalance to some degree, but the jury will be out for some time on that.....
Triple lock: yes, probably needs addressing, but you did state "I think all of my bills increased by more than inflation this year." - how do you want pensioners to address that impact, year on year?   I know this is the pensions corner of this great site, but I'm not sure the triple lock is the greatest challenge in front of life challenges in the UK.

Never easy answers in live, politics & governments, unfortunately.   
In general, and speaking as one with two young humans, early 20s finding their way, I am cheered by the late Hans Rosling who pointed out things in general are improving.

sevenhills

MaxiRobriguez said:

Or did you ignore that as well as it makes you feel uncomfortable that your generation got lucky rather than "earned" it? Because that's what it was - luck. Right place, right time. You haven't worked harder than any other generation on average but you got a tonne of perks no other generation was offered.

The point about the state pension is that it's a basic amount. People that turn 65/66/67/68 come from all walks of life, those on benefits, hard workers and millionaires.

Should people that have contributed nothing extra to society be rewarded by a handsome pension?

mgdavid

MaxiRobriguez said:

I think all of my bills increased by more than inflation this year.
We can argue the appropriateness of the triple lock forever but almost every data set you look at shows wealth concentrating in the elderly more than ever before with life chances of the young weaker than than it has been since gruel was a staple, and so giving above average inflation payrises to those people in a year when working people's income fell is, frankly, infuriating. 
https://www.newstatesman.com/politics/uk/2021/02/david-willetts-idea-young-people-are-getting-raw-deal-now-widely-accepted

a lot of people overlook the fact that the 70-year-old's generation looked after what money they had, didn't have today's sense of entitlement and didn't splash the cash on consumer products. We made do with what we could get cheaply or for nothing, bought doer-upper houses, drove 10 year old cars and rarely went out on the town. We also dropped to a single income upon starting a family yet still managed to maintain a cohesive family unit. Saving and planning for the future was still a priority - none of this YOLO nonsense - so it shouldn't be a surprise that in retirement we are well placed. As Gary Player famously said 'it's funny you know, the harder I worked the luckier I got'.