"Average Earnings Growth" and triple lock

michaels

SnowMan said:

michaels said:

Of course from April 27 we will be in the situation that those on pension credit will get the full amount whereas those on the state pension will get less as they will lose some of their income to tax. I can not see any logical way of justifying that those who have not contributed should get more than those who did but what do I know?

Worth remembering that the guaranteed pension credit top up (for a single person) is to £227.10pw for 2025/2026 which is less than the new state pension of £230.25pw (so £3.15pw difference). 

And the guaranteed pension credit rate top up amount will probably go up with prices into 2026 whereas the new state pension increase will be the higher earnings increase. Over time the difference should widen. 

Also it is income net of tax that is taken into account for pension credit purposes. So perhaps that would mean that when the new state pension becomes greater than the personal allowance that a net state pension figure would be used as income albeit the state pension is taxable but paid gross. 

So I wouldn't accept that the normal scenario (or even a common scenario) will be someone who 'has contributed' getting less.

That said it may be possible to construct an example where someone is better off (even now) through not having a full new state pension than having a full state pension. Perhaps a couple where one partner gets the full new state pension and one gets very little state pension and where there are disability or carer elements of pension credit in play and where there are passported benefits such as council tax benefit involved.       

Thanks, didn't realise it was based on net income - so we still may well see people who only get the state pension having some taken away in tax and then being paid a top up of pension credit....