State pension to rise by £290 today amid soaring inflation – check how it affects you



The state pension will rise by 3.1% today, but the increase is just half of inflation, the measure of the soaring cost of living.

The state pension and government benefits will both rise from today, but inflation, which is 6.2% could hit a 40-year high of 8.7% in the fourth quarter of 2022, according to the Office for Budget Responsibility (OBR).

It comes as energy regulator Ofgem hiked its price cap – which limits how much you can be charged for each unit of electricity and gas you use – by an eye-watering £693 for someone with typical use.

Council tax bills have just gone up as well while higher national insurance tax has taken effect.

Retirees on the full, new state pension, will see their earnings rise by £290 a year.

That’s an increase of up to £5.50 a week from April 2022, in line with last September’s inflation rate of 3.1%.

Is the state pension increase fair? Let us know your thoughts: [email protected]







Politicians capped this year’s state pension rise due to skewed earnings growth during Covid
(

Image:

PA)

Pensioners were last year told their incomes would rise by the highest out of inflation or 2.5% – whichever is highest this spring, after the the Prime Minister suspended the triple lock due to Covid- calling off an 8% increase.

A 3.1% rise means those on the full new state pension will see their annual income jump to £9,628.50 – an extra £289.50.

However experts warn it’s not enough to cover the cost of living. The Bank of England has previously warned inflation could reach 7% by September this year. That’s in response to supply disruption and energy price rises.

Center for Economics and Business Research economist Sam Miley said: “Pensioners will be particularly vulnerable to rising prices, due to the fact that their disposable incomes tend to be lower in the first place.

“Meanwhile, the nature of inflation at present, being heavily concentrated in utility prices, is also set to adversely affect pensioners, given that this makes up a relatively larger proportion of their overall spending.”

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, told The Mirror: “This week’s 3.1% increase in state pension offers little defense against soaring inflation.

“Many pensioners left with little, if any, means to meet their rocketing food and energy bills – it’s a truly horrible situation.

“If inflation remains high throughout the year then they may be in line for a decent increase next year but this is no comfort to those struggling today.”

More than two-fifths of people predict their finances will worsen over the next three months, according to a wealth and wellbeing tracker by LV.

Pensioners were found to be particularly likely to say their spending has increased.

Nearly two-thirds (65%) of retirees said their supermarket spend has increased in the past three months and 46% expect their finances to worsen over next three months.

Clive Bolton, managing director of protection, savings and retirement at LV= said: “Consumer sentiment had been steadily improving between spring and early autumn 2021 as the success of the vaccine programme, fall in death rates and easing of lockdown restrictions allowed life to begin to return to normal.

“However, the sharp rise in the cost of living has caused confidence to fall dramatically.

“Rising energy prices are becoming a significant problem for many people, particularly those who are retired.

“Rising prices coupled with poor returns on deposit accounts will dismay pensioners whose only or main source of retirement income is the state pension.

How much is the state pension rising ?

To get the full state pension you need a minimum of 10 “qualifying” years in work and 35 years’ worth of National Insurance contributions on your employment record.

Men born on or after April 6, 1951, and women born on or after April 6, 1953, are able to claim the new state pension.

The current full, new state pension is £179.60 a week, or around £9,339 a year.

A rise of 3.1% adds an extra £5.56 a week to the payment, increasing it to £185.15 a week.

Over the year that’s £9,628.50, and an extra £289.50.

Those who reached the state pension age before April 6, 2016, get the old state pension, known as the basic state pension which is currently £137.60, or £7,155.20 a year.

This is rising to £141.85 a week today, or £7,376.20 a year- that’s an extra £221.81.

Is the state pension enough to live on? Let us know your thoughts in the comments section below

If you’re on the state pension, you may be able to get a boost worth a few hundred pounds a year in the form of Pension Credits.

Around one million people are missing out on this support, figures show. It could also offer reductions on bills such as council tax and a free TV License.

Tom Selby, head of retirement policy at AJ Bell, said: “The good news for retirees is the state pension is set to increase by 3.1% next year, increasing the incomes of those in receipt of the full flat-rate benefit by £5.55 a week.

“However, the Government’s decision to suspend the earnings element of the state pension triple-lock means retirees will miss out on a blockbuster 8.3% increase.

“This decision will ‘cost’ someone in receipt of the full flat-rate state pension £9.35 a week in retirement income – or £486.20 over the course of the year.”

If the earnings element of the triple-lock had been retained, the old state pension would have risen by £149 per week and the flat-rate state pension to £194.50 per week.

The savings will net the Treasury around £4.5billion.

Becky O’Connor, head of pensions and savings at Interactive Investor, warned: “While those receiving a state pension can take comfort from it heading up in line with inflation from April, with energy prices rising by the minute and the cost of food and other consumer goods continuing to increase, older people will not feel out of the words yet.

“Pensioners are potentially more exposed than most to rising inflation because their income is limited and a higher proportion of their spending goes on essentials, like energy.

“Older people also tend to loose lower risk investments within their private pensions and are more likely to use cash savings to avoid investment losses later in life, so are more exposed to inflation eroding the value of their wealth. So it is some comfort to know that at least the state pension part of their income is rising in line with inflation.

“However, the economy remains volatile and retired people will be watching to see whether inflation continues to rise. If it does, then the state pension increase may still not feel big enough to cope with rising bills.”

Read More

Read More




www.mirror.co.uk

See also  'Scotland leading the way in investment in women's golf'

Related Posts

George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

Leave a Reply

Your email address will not be published.