AJ Bell press comment – 19 October 2022
AJ Bell head of retirement policy Tom Selby comments on today’s Prime Minister's questions:
“Retirees will be breathing a huge sigh of relief after Prime Minister Liz Truss confirmed the state pension triple-lock will be retained next year. The commitment should mean a blockbuster 10.1% increase in state pensions in 2023, providing a welcome boost to the incomes of millions of retirees.
“Despite comments earlier this week from the new Chancellor, who indicated the government would review all spending plans in the round before committing to the triple-lock, the Prime Minister has now insisted the state pension will be inflation-proofed next year.
“This was perhaps inevitable given the electoral realities facing this embattled PM. Although nothing can be taken for granted in the current political climate, with tax and spending pledges being ripped up within weeks. Retirees banking on their state pension rising in line with prices will want to see it written into legislation, given the very recent history of policy u-turns.
“The move should see the full flat-rate state pension push well past £10,000 a year for the first time, while the full basic state pension will be boosted to over £8,100 a year through a 10.1% increase aligned to September’s CPI inflation figures, published this morning.
“The decision also opens up a huge can of worms over working-age benefits. The triple-lock is already viewed as intergenerationally unfair by many, as its existence increases the incomes of Baby Boomers and could force the state to reduce pensions for younger people faster in the future – either by hiking the state pension age or reducing its value, or both.
“If this potential unfairness is compounded by not providing inflation protection for working-age benefits, younger people will understandably feel extremely hard done by.”
State pension increases for 2023/24:
If the triple-lock is retained, as Liz Truss indicated in parliament today, the state pension should be uprated by 10.1% next year in-line with CPI inflation for September:
- The full flat-rate state pension, paid to those reaching state pension age from 6 April 2016, will increase from £185.15 per week to £203.85 per week (£10,600.20 per year) from April next year*
- The basic state pension, paid to those who reached state pension age before 6 April 2016, will increase from £141.85 per week to £156.20 per week (£8,122.40 per year)*
*Rounded to the nearest 5p.
