Following today’s publication of the inflation rate for September, Royal London director of policy Steve Webb has said that, whilst the rates of working age benefits have been squeezed for many years, “pensioners look set to enjoy another above-inflation increase”.
The publication of the inflation rate means that the government now has all the information that it needed to set pension and benefit rates for April 2019 and, under the terms of the pensions ‘triple lock’ policy, pensions have to be increased by the highest of one of three criteria.
They either have to be increased in line with the growth in earnings, which was 2.6% in July 2018; by the growth in prices, measured by the CPI, which is 2.4%; or a minimum of 2.5%.
With today’s fall in price inflation, the pension will rise in line with the growth in average earnings (2.6%), taking the new state pension from £164.35 per week in 2017/18 to £168.65 for 2018/19. The old basic state pension will also see an increase from £125.95 to £129.25.
However, pensioners on the old state pension will see an increase in other elements of their pension, such as in the state earnings related pension scheme (SERPS) in line with the increase in the CPI.
The main rate of the Guarantee Credit for the poorest pensioners is linked by law to the growth in average earnings, also resulting in an increase of 2.6%.
Webb calculated that those receiving the full rate of the new state pension will get just over an additional £230 per year.
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