Does the State Pension increase every year?

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?

Because the intention of the triple lock is over time to ratchet up the real value of pensions. It's all very gradual which makes it affordable & more political acceptable than suddenly announcing a 25-50% increase in pension rate.

nigelbb

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.

The intention of the triple lock is to benefit all of us over time by ratcheting up the real value of the state pension. It's all very gradual which makes it affordable & more political acceptable than suddenly announcing a 25-50% increase in pension rate. At the current value of £9,100 or less it's hardly a prince's ransom.

zagfles

nigelbb 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.

The intention of the triple lock is to benefit all of us over time by ratcheting up the real value of the state pension. It's all very gradual which makes it affordable & more political acceptable than suddenly announcing a 25-50% increase in pension rate. At the current value of £9,100 or less it's hardly a prince's ransom.

The flat rating of the state pension has reduced it for most people who've not yet reached state pension age. Someone who'd worked all their life on minimum wage gets less state pension under the single tier than they would have done under the previous basic plus S2P state pensions.

But most people don't understand that, so I guess the triple lock lets the govt pretend they're being really generous with the state pension while the flat rating saves them far more.

arnoldy

badmemory said:

To look at state pension from another point of view.   The gov went for triple lock because they were embarrassed to be the "poor man" of Europe. 

The whole tax and pension system is incredibly generous in UK in the round, which is good and we should value what we have:

• Full tax relief at marginal rate up to £40,000pa gross
• 25% tax free lump sum
• ISAs with massive £20k limit pa
• Free non contributory health care
• A plethora of extra benefits for old folk through the benefits system.
• Flat rate £9k pension & you accrue if you have kids, are unemployed, disabled etc
• Pension of £9k same for billionaires or ordinary folk (in Europe what you get is often dependent on Earnings i.e. what you pay in) 

The increased State pension means that we can hack away at the expensive and soul destroying means testing as well. Under the old system there was little incentive for many to "put away a little" for their old age (in fact perversely it would have been stupid) as they would get the same as a non saver topped up with credits. The new pension of £9k+ and rising per person is a great start - and encourages personal responsibility and saving for extras.

The whole tax and pension system is incredibly generous in UK in the round

Andy_L

nigelbb 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.

The intention of the triple lock is to benefit all of us over time by ratcheting up the real value of the state pension. It's all very gradual which makes it affordable & more political acceptable than suddenly announcing a 25-50% increase in pension rate. At the current value of £9,100 or less it's hardly a prince's ransom.

What's the "street value" of a £9k, (better than) index linked pension these days? Million quid-ish?

molerat

Andy_L said:

What's the "street value" of a £9k, (better than) index linked pension these days? Million quid-ish?

More like £250 - 300K.  Single life annuity escalating by 3%  from age 65 at around 3.3%. https://www.sharingpensions.co.uk/annuity_rates.htm#text5

ErinGoBrath

Andy_L said:

nigelbb 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.

The intention of the triple lock is to benefit all of us over time by ratcheting up the real value of the state pension. It's all very gradual which makes it affordable & more political acceptable than suddenly announcing a 25-50% increase in pension rate. At the current value of £9,100 or less it's hardly a prince's ransom.

What's the "street value" of a £9k, (better than) index linked pension these days? Million quid-ish?

About £300,000 if payable from age 66 / 67.

NedS

Andy_L said:

nigelbb said:

The intention of the triple lock is to benefit all of us over time by ratcheting up the real value of the state pension. It's all very gradual which makes it affordable & more political acceptable than suddenly announcing a 25-50% increase in pension rate. At the current value of £9,100 or less it's hardly a prince's ransom.

What's the "street value" of a £9k, (better than) index linked pension these days? Million quid-ish?

Maybe around £300-350k for average person, no health conditions

https://www.hl.co.uk/retirement/annuities/best-buy-rates

Stubod

..those who are moaning about the unfairness of the triple lock idea seem to forget that they will also benefit from any increase when their time eventually comes...?

xylophone

.those who are moaning about the unfairness of the triple lock idea seem to forget that they will also benefit from any increase when their time eventually comes...?

If it's kept......

https://www.ifs.org.uk/publications/15132