If you receive the State Pension, you’ll know you get an increase at the start of each financial year in April. Because of the Government’s triple-lock guarantee, the amount you get will always increase in line with inflation, wage growth, or 2.5% – whichever is higher.
This week it’s been announced that wages grew by 4.7% on average between May and July (the period the figure is taken from), so it’s expected that this will be the amount applied to the next annual pension uplift.
For someone on the full new State Pension, weekly payments would rise from £230.25 to around £241.05. That adds up to an extra £560 a year.
If you reached pension age before April 2016, you’ll be on the old state pension, which is lower. With the same assumed percentage increase, your weekly payments will rise from £176.45 to £184.75. This works out at £430 a year.
If you don’t have a full national insurance contribution record (usually 35 years) the amount you receive will be lower. This can affect people who were on lower incomes, worked part-time or took career breaks.
There are ways to boost your record and increase your pension payments, either for free by claiming credits to cover years taken off work to raise children or provide care, or by paying to plug gaps. If this applies to you, I would urge you to look into your options.
While this above-inflation pension increase will be a welcome boost, many pensioners are still coping with higher food, fuel and energy prices, so the rise may only go part of the way towards easing financial pressures.
Alongside the State Pension, there are other forms of help available for people of pension age. Pension Credit is an important one to check, as it can top up a low income and provide access to further support such as help with rent, Council Tax and utility bills.
The Winter Fuel Payment gives a lump sum to help with heating costs in colder months, while the Warm Home Discount scheme provides a one-off reduction on electricity bills for those who qualify. Depending on circumstances, pensioners may also be entitled to help with Council Tax, free prescriptions, travel concessions, or a reduced TV licence if over 75.
It is worth remembering that the pension rise could have tax implications. Because the personal allowance remains frozen, some people may find that their State Pension, combined with any private pension or other income, takes them above the threshold for paying income tax. Checking your position now will avoid surprises when the increase takes effect.
The uplift in the State Pension will certainly provide some relief, but making sure you are receiving every form of support available is just as important.
If you are unsure what you might be entitled to, contacting Citizens Advice or using an online benefits checker can be a helpful first step. Homes Plus and Wrekin customers can also contact our specialist teams.