The state pension is set to increase massively in 2022 – how much will it increase and why?
The statutory pension is about to take off in 2022 – but how much exactly?
Increases in the pension payment are decided by the triple lock. This means that the state pension increases every April in line with wage growth, the price increase or by 2.5 percent – depending on which of these three values is highest.
However, the strong recent earnings and inflation growth as the UK begins its recovery from the pandemic has raised concerns that meeting that guarantee will be problematic.
The state pension could rise three times as fast as prices or income as wages fell sharply from the coronavirus outbreak in 2020 – when many people were on vacation – followed by an expected increase in takeaway wages as the economy becomes Revived in 2021.
Triple-lock rules would then dictate that a spike in wage growth would massively boost retirement in 2022 if a decision is made in fall 2021.
READ MORE: How Much Your Statutory Pension Should Be Getting
How high will the pensions rise?
With average earnings data showing a 5.6 percent increase and consumer price index (CPI) for inflation hitting 2.1 percent, the process of setting a new state pension for April 2022 is likely to be expensive.
It is believed that when the country goes back to work after the pandemic, these record wage increases will add £ 15 a week to pensions.
That means the current maximum of £ 179.60 per week for the New State Pension would be £ 194.60 as of April 2022, an increase of over 8 percent.
That’s even more than previous projections by the Resolution Foundation, which had forecast a 5 percent increase in statutory pensions in 2022.
The Foundation had said: “Such a large increase is particularly difficult to justify when working-age families are facing the greatest burden of the UK employment crisis.
“The government should get rid of the triple lock and move to a much clearer policy that sets a clear target for the value of the state pension and then holds it there through a smoothed income link.”
Will the government allow such a large increase?
The British government is committed to the triple pension lockdown, Downing Street has insisted on it.
Sir Steve Webb, a former pension secretary, had suggested that the government might end up “falsifying” the numbers in order to reduce a billion dollar increase in state pensions.
This could include measuring underlying earnings growth without the biases or applying the triple lock formula over a two-year period, which would mean this year’s earnings surge would be partially offset by last year’s earnings decline, he said.
The official spokesman for the prime minister said this week: “We are committed to the triple ban.
“There is still great uncertainty about the development of the median income and whether it will increase as forecast. Our focus is on ensuring fairness for both retirees and taxpayers.”
Regarding the Downing Street statement, Sir Steve, who is now a partner in consulting firm LCP (Lane Clark & Peacock), said the government may still find “leeway”.
He said, “Although the triple lock policy sounds crystal clear, the reality is that the government could still find ‘room to maneuver’.
“You could say they stuck to the triple lock while they measured earnings differently or over a different period of time.
“The main economic variables won’t be available until the fall, so the government doesn’t have to make a decision now, but I have no doubt that ministers are given a number of options to unfasten this very expensive hook while sticking to the guidelines to hold fast to the spirit of their manifesto. ”
In April 2020, the state pension rose 3.9 percent, the largest increase since 2012, according to the Triple Lock Policy.
It looked at a full new state pension from £ 168.60 to £ 175.20 a week.
When do I get my pension?
The statutory retirement age is currently 66 years, but will be increased to 67 years by April 2028.
The changes mean that those born between March 6, 1961 and April 5, 1977 at the age of 67 will receive their state pension.
The retirement age will rise even further to 68 sometime between 2044 and 2046.
Check your retirement age on the government website here
Will anything else change?
The UK government is also planning to change the way the state pensions are calculated for Britons who want to retire abroad.
The main changes, which will come into effect from January 1, 2022, will affect whether or not a person is eligible for a state pension.
Under the new rules, UK citizens living in Australia (before March 1, 2001), Canada or New Zealand will not be able to count the time spent abroad as a credit towards their pension.