Triple lock increase for April 2027 is 3.9% (probably)

zagfles

https://forums.moneysavingexpert.com/discussion/comment/82140257#Comment_82140257

There might be no "triple lock" on the minimum wage but it's increased far faster than both inflation and the state pension since its introduction.

Min wage 1999 £3.60, min wage 2026 £12.71, an increase of 253%

Old basic state pension 1999 £66.75, 2026 £184.90, an increase of 177%

Inflation was 95% over that period.

GunJack

Another reason for triple lock was to raise pensioners out of poverty, where the official definition of poverty is x% of average earnings. Surely this definition of poverty needs to be held in check as you'll end up with SP being way above actual poverty levels rather than the current measure?

Baldytyke88

https://forums.moneysavingexpert.com/discussion/comment/82140435#Comment_82140435

I will assume your facts are correct, but …

"Over the last 20 years, UK State Pension increases have outpaced average wage growth in percentage terms. Between 2010 and 2023 alone, the UK State Pension rose by 60% in cash terms, while average earnings grew by only 40%."

Qyburn

Old basic state pension 1999 £66.75, 2026 £184.90, an increase of 177%

I don' knodon't know how to factor the much higher New State Pension into that sort of overall comparison. But it does seem to me that those on the Basic SP are being short changed. Given that will be a shrinking population, it's a shame there's no plan to close or reduce the gap.

SnowMan

https://forums.moneysavingexpert.com/discussion/comment/82140499#Comment_82140499

That's a terrible way to express the increase because it gives the impression that there has been a 20% increase in the state pension above earnings. That is because the % difference of 20% (= 60% - 40%) is a percentage of the state pension at 2010/2011 not a percentage of the state pension now.

The state pension at 2027/2028 is 14% higher than had it had been increased with earnings after 2010/2011 when the triple lock came in. To me that's the most balanced way to describe what has happened.

And the state pension at 2023/2024 was also 14% higher than had it been increased with earnings since 2010/2011, because since then increases have been in line with earnings.

QrizB

I don' knodon't know how to factor the much higher New State Pension into that sort of overall comparison.

The Basic State Pension and the New State Pension increase by identical factors. For example if the BSP goes up by 2%, the NSP also goes up by 2%.

But it does seem to me that those on the Basic SP are being short changed.

Any particular reason for thinking this? Don't forget that the NSP also replaces SERPS / S2P, so there are plenty of BSP recipients whose total state pension is higher than the NSP.

harz99

https://forums.moneysavingexpert.com/discussion/comment/82140569#Comment_82140569

Put very simply, % may be the same, but in cash terms the result is old gets less than new, a gap which has widened year on year and is clearly unfair as pensioners costs go up by the same amount irrespective of which version of SP they are on.

molerat

So £415.44 is less than £241.30 ? That is the problem with comparing apples to pears. Both myself and MrsM are post 2016 pensioners and she receives more SP than me and her increase each year is greater than mine so the gap gets larger. I put in many more years "work" than her and have more full years NI so is that fair ? (As many of you will be aware I do know the reasons why and how it all works so I am not complaining, just making a point.) Also is it fair on those who retired pre 2010 that they had to work for 39 or 44 years to receive that same old basic pension amount compared to 30 for those retiring after ?

QrizB

Put very simply

I think you might've put it too simply.

% may be the same, but in cash terms the result is old gets less than new

You've got that backwards.

As a cohort, pensioners on the "old" pension get more per capita than pensioners on the "new" pension do. We've seen examples of "old" pensioners receiving more than £20k pa in state pension.

The New State Pension was introduced to save the Treasury money.

xylophone

so there are plenty of BSP recipients whose total state pension is higher than the NSP.

That is true.

And rather oddly, my relative (late seventies) on old SP receives a total SP slightly higher than full new SP despite having been a member of a contracted out DB scheme for well over thirty years.

However, let's take a person X reaching SPA say March 2016, so that he is eligible for old state pension.

He was never contracted out and for the tax year 2016 /17 will receive full BSP £119.30 plus ASP ( of an amount which coincidentally brings him up to the level of a full new state pension (£155.65).

Now take his colleague Y who was in the same position but reached SPA in May 2016 and whose starting amount for NSP (BSP + ASP) was £155.65.

Fast forward to the new tax year.

X's BSP increases under triple lock, highest of 2.5%/earnings growth/CPI.

X's ASP increases by CPI.

Y's NSP increases under triple lock.

In 2017, 2.5% was higher than earnings growth (2.4%) or CPI (1%).

Thus in 2017 person X receives £122.30 BSP + £36.30 = £158.60

Person Y receives £159.55.