The state pension is set to rise by up to £460 a year (£8.80 a week) from 6 April 2025 under what's known as the 'triple lock' guarantee. But MoneySavingExpert.com (MSE) founder Martin Lewis has warned that any rise will come too late to help pensioners set to lose their Winter Fuel Payments this winter, while most won't get the maximum increase. Here's what you need to know...
Read the full story here:
State pension set to rise by up to £460 a year - but Martin has two warnings for pensioners
If you haven't already, join the forum to reply.
We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
State pension set to rise by up to £460 a year
MSE_Emily
Posts: 199 MSE Staff
2
Comments
-
Well I didn’t realise the pension raise would come to late
How clever that man is
I’m a pensioner and not a rich one
The die is cast so move on
Nothing to see here
No need for another long boring thread4 -
That article really does no favours for the credibility of this site, I do hope Martin had nothing to do with approving it. It is typical "red top" sensationalist rubbish with half truths perpetuating the myth that those on the "old pension" only receive £169.50 per week when they could in fact be receiving as much as £387.90 per week, £20240 per year.
13 -
Totally agree with Molerat - my elderly mother gets around £65 more under the old scheme than I can possibly ever achieve under the new. It's simply not true that the average under the old is less than under the new.2
-
molerat said:That article really does no favours for the credibility of this site, I do hope Martin had nothing to do with approving it. It is typical "red top" sensationalist rubbish with half truths perpetuating the myth that those on the "old pension" only receive £169.50 per week when they could in fact be receiving as much as £387.90 per week, £20240 per year.
A neighbour's 'old' State pension is over £22K per year, due to high levels of SERPS/SP2 and 5 years deferral at the old, much more generous, rate of 10%. I won't repeat what he says in response to the calls for all pensioners to be put onto the new nSP rate - I'd end up being banned from this site!2 -
There are some interesting stats provided by DWP here, particularly 12 and 13.
A bit out of date now but they are temporarily unable to provide updated State Pensions stats.
https://www.gov.uk/government/statistics/dwp-benefits-statistics-may-20232 -
We can all be thankful for the Triple Lock and the wonders it has done for the value of the State Pension.
Or has it?
The chart below shows the value of the Basic State Pension between 2001-10, and what it would have been had it been uprated strictly in line with CPI, RPI or earnings growth (including negative values where applicable, and with no rounding).
The Basic State Pension lagged behind earnings growth, but comfortably outpaced both CPI and RPI. During this period the statutory uprating was RPI with a floor of 0% (ie it can never be negative), Labour operated a party commitment to uprate by at least 2.5%, and ad hoc increases at Budget were commonplace.
After April 2011 the Triple Lock was introduced, and statutory uprating changed to the higher of average earnings, CPI or 2.5%. This was not adhered to during the COVID period.
For the period between 2010-25, Basic State Pension has pretty much tracked RPI. It is far ahead of CPI and earnings. If the Triple Lock had not been introduced and uprating had remained at RPI uprating with a floor of zero, the Basic State Pension would be slightly higher in 2025/26 than it will actually be, albeit by a very small amount.
Over the period 2001-25, Basic State Pension has outperformed all of CPI, RPI and earnings, particularly CPI. It is remarkable that during such a long period RPI is higher than average earnings growth.
Basic State Pension uprating was linked to RPI all through the 1980s and 1990s, so State Pension uprating has largely tracked RPI for the last 45 years, with a slight uptick between 2001-10. Uprating since 2010 has been the lowest in 45 years when looked at in RPI terms. Also, only Basic State Pension benefits from Triple Lock, not Additional Pension (eg SERPS, State Second Pension) whereas before 2011 all of the State Pension benefitted from RPI uprating.
Older pensioners really do have something to moan about from that perspective.
Notes:
Chart starts at 2001 as that is the earliest date to which consistent earnings series is available
September 2024 CPI is assumed to be 1.8% and RPI 2.7%, actual figures will be available in October
New State Pension is uprated by same rate as Basic State Pension, Basic State Pension is used for consistency as new State Pension was only introduced in 2016
2 -
Silvertabby said:molerat said:That article really does no favours for the credibility of this site, I do hope Martin had nothing to do with approving it. It is typical "red top" sensationalist rubbish with half truths perpetuating the myth that those on the "old pension" only receive £169.50 per week when they could in fact be receiving as much as £387.90 per week, £20240 per year.
A neighbour's 'old' State pension is over £22K per year, due to high levels of SERPS/SP2 and 5 years deferral at the old, much more generous, rate of 10%. I won't repeat what he says in response to the calls for all pensioners to be put onto the new nSP rate - I'd end up being banned from this site!
Basic SP. £169.50
Pre 97 additional SP. £105.86
Less Contract Out deduct. £83.79
Payable. £22.07
Post 97 additional SP. £7.15
Graduated Retire Benefit. £9.82
All of which pays a total of £208.54.
Of course, the next pension rise will see that differential between old and new increase, as will each successive year.
Is this my sole source of income, no of course not, but illustrates the point that no one person on the Basic State Pension receives the same.0 -
harz99 said:Silvertabby said:molerat said:That article really does no favours for the credibility of this site, I do hope Martin had nothing to do with approving it. It is typical "red top" sensationalist rubbish with half truths perpetuating the myth that those on the "old pension" only receive £169.50 per week when they could in fact be receiving as much as £387.90 per week, £20240 per year.
A neighbour's 'old' State pension is over £22K per year, due to high levels of SERPS/SP2 and 5 years deferral at the old, much more generous, rate of 10%. I won't repeat what he says in response to the calls for all pensioners to be put onto the new nSP rate - I'd end up being banned from this site!
Basic SP. £169.50
Pre 97 additional SP. £105.86
Less Contract Out deduct. £83.79
Payable. £22.07
Post 97 additional SP. £7.15
Graduated Retire Benefit. £9.82
All of which pays a total of £208.54.
Of course, the next pension rise will see that differential between old and new increase, as will each successive year.
Is this my sole source of income, no of course not, but illustrates the point that no one person on the Basic State Pension receives the same.
Including the contracted-out deduction, that is a total of £292.33 p/w or just over £15,000 p/a. If you had deferred for 5 years like Silvertabby's neighbour and benefitted from 10.4 percentage point uplift p.a, the pension would have been increased by 52%, and would be £444 p/w, or just over £23,000 p/a.
So your starting State Pension entitlement appears to actually be very similar to Silvertabby's neighbour, with the difference produced by contracting-out and choosing to defer drawing pension for five years.3 -
The UK SP is one of the worst values for money state pensions in the developed world. In the US I pay half the tax rate compared to NI into the Federal Social Security system and I will get 2.5 times as much as the UK flat rate SP at age 67.
The new flat rate UK SP was a cost cutting exercise and most people are worse off under it than the old scheme for a few reasons.
1) The removal of SERPS, S2P etc.
2) Even if you would only get Basic SP, pension credit, top ups and other benefits usually gave someone more than the new flat rate SP and those benefits were reduced when the flat rate pension started.
Also for many contracting out has been a disaster and I see a similar scary scenario as the long term issues with high fees and poor management of DC pensions start to hit. It's another area where the promises of commercialization have fallen short for many people.
Personally I was happy the see the new flat rate SP adopted as I pay voluntary NI and all I would have qualified for under the old system was the Basic SP (~£120/wk in 2014 ) and the new flat rate SP immediately increased that to £168/wk.And so we beat on, boats against the current, borne back ceaselessly into the past.1 -
Whoopee the state pension is rising by this/that percent! Well, it usually amounts to merely a couple of pounds to those on low pension (but just over pension credit amount) in the first place Why not make the pension rise by a flat rate to all? And then those on high pensions and private pensions will pay tax and those at the bottom wont.
0
Categories
- All Categories
- 346.7K Banking & Borrowing
- 251.4K Reduce Debt & Boost Income
- 451.4K Spending & Discounts
- 238.9K Work, Benefits & Business
- 614.3K Mortgages, Homes & Bills
- 174.8K Life & Family
- 252.1K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 15.1K Coronavirus Support Boards