State pension could increase by 17.8 percent over two-year period

The state pension could increase by 17.8 percent over a two-year period as high levels of inflation mean payments will get another large boost next year.

Payments increase each year in line with the triple lock policy, which guarantees the state pension goes up in line with the highest of 2.5 percent, the rise in average earnings or inflation.

High levels of inflation throughout last year meant the September figure for inflation was used to determine the increase from this April, with pensioners getting a 10.1 percent boost.

The Bank of England is forecasting inflation will remain high throughout this year as well, and will be at seven percent in September.

If the state pension increases by seven percent next year, this means payments will have increased by 17.8 percent between April 2022 and April 2024.

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This means payments will far outpace the rise in average wages, which increased 6.5 percent in the year to April 2023.

The current full basic state pension is £156.20 a week, or £8,122 a year, while the full new state pension is £203.85 a week, or £10,600 a year.

If payments increase seven percent next April, the full basic state pension will go up to £167.13 a week, or £8,691 a year, while the full new state pension will go up to £218.11 a week, or £11,341 a year.

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Alice Guy, head of Pensions and Savings at interactive investor, said: “The state pension forms the backbone of most people’s pension income and a rise in the state pension will be a lifeline to many people on the breadline. 

“There’s a myth that all pensioners are wealthy but this simply isn’t the case with many pensioners relying on the state pension as their main source of income.”

She said pensioners are one of the most vulnerable groups being hit by the rising cost of living due to their limited options to increase their income.

She encouraged pensioners to check if they are eligible for Pension Credit, saying: “If you have an elderly relative who’s struggling on a low income, then it’s worth checking if they’re entitled to any benefits like pension credit. 

“Pension Credit works by topping up your income to £201 if you’re single and £306.85 if you have a partner, but you could get around £42 to £76 more each week if you have a disability, you care for someone or you’re responsible for a child.”

A person can claim Pension Credit when they reach the state pension age, which is currently 66, regardless of if they are claiming their state pension or not.

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