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State pension set to rise by up to £460 a year

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

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  • MikeJXE
    MikeJXE Posts: 3,474 Forumite
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    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 thread 
  • p00hsticks
    p00hsticks Posts: 13,618 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    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. 
  • Silvertabby
    Silvertabby Posts: 9,475 Forumite
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    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.
    Exactly.  I'm just so tired of reading wails of "unfair - all old pensioners get £50 per less than all new pensioners" when reality is nothing like it.

    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!  
  • 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    A bit out of date now but they are temporarily unable to provide updated State Pensions stats.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-2023
  • hugheskevi
    hugheskevi Posts: 4,212 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    edited 10 September at 8:24PM
    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

  • harz99
    harz99 Posts: 3,679 Forumite
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    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.
    Exactly.  I'm just so tired of reading wails of "unfair - all old pensioners get £50 per less than all new pensioners" when reality is nothing like it.

    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!  
    I rather suspect your neighbour is the exception rather than the rule, I'm on the Basic SP and even with the add ons you quote, I receive about £13 a week less than the New SP currently is, breakdown as follows:

    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. 
  • hugheskevi
    hugheskevi Posts: 4,212 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    edited 10 September at 10:47PM
    harz99 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.
    Exactly.  I'm just so tired of reading wails of "unfair - all old pensioners get £50 per less than all new pensioners" when reality is nothing like it.

    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!  
    I rather suspect your neighbour is the exception rather than the rule, I'm on the Basic SP and even with the add ons you quote, I receive about £13 a week less than the New SP currently is, breakdown as follows:

    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. 
    You did contract-out though, and so get the amount you would have received in Additional Pension had you remained contracted-in paid through a private pension instead. You can't simply discount that entirely just because you either decided to contract out, or participated in a private pension that required you to be contracted out to participate. You are still receiving the value of the State Pension, it is just paid through a private pension.

    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.
  • Bostonerimus1
    Bostonerimus1 Posts: 957 Forumite
    500 Posts First Anniversary Name Dropper
    edited 11 September at 3:21AM
    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.
  • 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.
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