MILLIONS of people are set for a bumper pay rise next year as the triple lock makes a return.
Inflation hit double figures at 10.1% in the 12 months up to July – up from 9.4% in June.
State pension rates will be protected by the triple lock in 2023
Retirees are expected to benefit from rising inflation now that the government has confirmed that the state pension triple lock will return next year.
Treasury secretary Simon Clarke confirmed the news back in June with a written statement.
Simone said: “Next year, the triple lock will apply for the state pension.
“Subject to the Secretary of State’s review, pensions and other benefits will be uprated by this September’s CPI which, on current forecasts, is likely to be significantly higher than the forecast inflation rate for 2023/24.”
Introduced in 2010, the triple lock is used to ensure that pensions don’t lose their value in real terms.
To ensure this the “triple lock” includes three seperate measures to ensure that pensions rise at least in line with inflation annually.
Pension payments will likely rise by over 10% in 2023 because inflation (consumer price index) will be higher than both the other two measures in the guarantee – average earnings and 2.5%.
A rise of 10.1% alone would be enough to boost income for those in retirement by around £1,000 a year.
The triple lock calculation for the annual rise to the old age benefit was temporarily suspended because of the pandemic and was reduced to a double lock.
Wage growth was removed from the uprating because the coronavirus skewed wage data that would have given pensioners a bumper pay day.
Instead the state pension rates increased by inflation of 3.1% in April, based on last year’s inflation figures.
But inflation is currently far higher at 10.1% leaving pensioners worse off in real terms.
Prices have shot up including food, fuel and energy costs – and the Bank of England predicts inflation could even hit 13% this year.
The new state pension amount is now £185.15 and could rise to over £203.70 a week in 2023.
If inflation continues to hit double figures as experts predict it could push up state pension payments by an extra £18.70 a week – or £962.10 a year.
But if that figures goes as high as 11% it would go up by £20.37 a week, or £1,059 a year.
A rise would also push up pension credit amounts for the most hard-up pensioners.
The rise will be based on whatever the rate of inflation is in September this year.
But those living off the state pension face a tough wait until the benefit “catches up” to current inflation rates.
The energy price cap increased by 54% in April adding hundreds of pounds to bills and is set to rise to £5,300 a year this winter, experts have warned.
The government previously announced a package of support that will see pensioners get one-off payments worth hundreds of pounds between now and next year’s state pension rise.
Millions of pensioners will get a £300 payment in October to help cover the rising cost of heating homes over winter.
Pensioners on the lowest incomes will get a £650 payment along with others on benefits like Universal Credit from July.
And those with disabilities could be eligible for a £150 payment.
Anyone struggling with higher bills or worried about debt can get help.
There are plenty of organisations where you can seek advice for free, including:
- National Debtline – 0808 808 4000
- Step Change – 0800 138 1111
- Citizens Advice – 0808 800 9060