Annual Pension increase

Ronin2306

I am 77 years of age and in receipt of the older (lower) state pension. Our last pension increase was pathetic in relation to the CPI and I feel that, although we will get a better increase this year, I know we are going to lose out yet again. The increase in benefits is calculated on the September CPI, just 1 month before the CPI rockets because of the October energy rates increase. Is there any chance that the government could be persuaded to base any increases on the October CPI which would be much fairer? I also feel that the annual increase in personal allowances should be re-introduced as a matter of urgency.

  

molerat

The maximum "older" state pension is in fact much higher than the single rate new state pension - £327.75 v £185.15

Your last increase was exactly the same as that for everyone else, it can be different due to different rates being applied to the different portions but this year it was all at CPI, the same as everyone else.

The government is unlikely to make any changes to the methodology of increases.  It is always based on the Sept inflation rates and there is already uproar in some sectors because the increase will be way higher than wages and private sector pensions.

Annual allowance increases is something that we will have to wait and see.

MX5huggy

It was not “pathetic” it was exactly CPI, for the year before. As the next increase is mort than likely to be. 

marlot

"pathetic in relation to the CPI"

I'm expecting a huge outcry in the autumn/spring that pensioners are getting unfairly good increases.  At least one newspaper has started already.

Flugelhorn

sometimes you win, sometimes you lose with pension increases - yes the public sector ones went up by last Sept's CPI and next year it will be this Sept's CPI which will probably be much bigger - definitely a lot bigger than any pay rise I would have got if I had still been working 

JoeCrystal

I am afraid I do not have much sympathy here. My employer only gave me 4.3% increase with a confirmation that my salary will be frozen until 2024...

Albermarle

Plus all pensioner households  will get a £300 additional Winter Fuel payment ( on top of the existing one) to help with cost of living etc . If they are getting some means tested benefits, then they will get another £650 + the £400 energy rebate + probably the council tax rebate.

To help pay for this and even more so for all the massive Covid costs, then most likely personal tax allowance will remain frozen ( if Rishi wins anyway )

dunstonh

Is there any chance that the government could be persuaded to base any increases on the October CPI which would be much fairer? 

Fairer to whom?  Fairer to working taxpayers who are getting much less but mostly fund current pensioners?

 I also feel that the annual increase in personal allowances should be re-introduced as a matter of urgency.

And what you would tax instead or cut back on to pay for that?

xylophone

The maximum "older" state pension is in fact much higher than the single rate new state pension - £327.75 v £185.15

Yes, but this is dependent on the person's level of earnings and amount of SERPS/S2P accrued.

https://en.wikipedia.org/wiki/State_Second_Pension

And it is possible for people in receipt of new state pension to be receiving more than a full new state pension.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

zagfles

The thing to understand about inflation rates like CPI is they don't measure how fast prices are rising at this moment in time, they measure the change in prices between now and 12 months ago. So the Sept 2021 inflation figure was how much prices rose between Sept 2020 and Sept 2021, and the Sept 2022 figure is how much prices rose between Sept 2021 and Sept 2022.

So it doesn't matter in the long run which month's inflation figure is used, all inflation is included. The trouble at the moment is the lag - you'll only get Sept 2021-Sept 2022 inflation in the April 2023 pension, although that will likely be substantive.

It might be an idea to use a month closer to when the rise takes place, it should be possible now that everything's automated, the trouble is this would result in a one-off hike in the state pension (and whetever else it applies to), which the govt are probably keen to avoid with the deficit etc.

MK62

xylophone said:

The maximum "older" state pension is in fact much higher than the single rate new state pension - £327.75 v £185.15

Yes, but this is dependent on the person's level of earnings and amount of SERPS/S2P accrued.

https://en.wikipedia.org/wiki/State_Second_Pension

And it is possible for people in receipt of new state pension to be receiving more than a full new state pension.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

Yep...my own forecast is quite a bit more than the "full" new state pension.......and I know a few others for whom this is also the case, so I don't think it's that uncommon tbh.