In a highly anticipated move, Chancellor Jeremy Hunt announced in his Autumn Statement that the state pension "triple lock" will remain unchanged, bringing relief to retirees across the United Kingdom. The triple lock, introduced in 2016, is a crucial government commitment to elevate the value of the state pension every tax year, choosing the highest among inflation, average wage growth, or 2.5 percent. The statutory requirement to uprate the basic state pension and the new state pension each year ensures that pensioners receive a fair share of the economic growth.
There had been speculation that the Chancellor was considering using a lower metric to calculate next year's state pension, potentially resulting in pensioners losing out on approximately £75 per year. However, facing a significant backlash from Conservative MPs and concerns about upsetting loyal elderly voters, Mr Hunt has opted to maintain the status quo.
The decision is to use the average earnings rate of 8.5 percent to determine the rate of pensions, as it surpasses the inflation rate.
The inflation rate for September - the crucial month used to calculate the triple lock - remained at 6.7 percent. In contrast, the average earnings increase for May to July was a robust 8.5 percent. In adherence to the triple lock policy, this means the 8.5 percent figure will be applied to increase the state pension from April 2024.
The Chancellor's commitment to uphold the triple lock guarantee and increase the state pension in line with the unaltered average earnings increase figure of 8.5 percent is a significant boon for retirees. For those on the new UK state pension introduced in 2016, the weekly pension will rise to £221.20 from April 2024, up from the current level of £203.85. This represents an annual increase of around £900 compared to the current year and is £75 more per year (£1.45 each week) than would have been granted had the Chancellor chosen to alter the metrics. Basic state pensioners will also witness a boost, with their weekly amount increasing from £156.20 to £169.50. This announcement is a welcome relief for pensioners, providing them with greater financial security and a well-deserved boost to their income in the coming years.
