The Department for Work and Pensions (DWP) is poised to increase payments for new state pensioners by 4.8%, adhering to the Triple Lock guarantee under the Labour government. This rise means those receiving the full new state pension could see their weekly payments climb to approximately £241.30, amounting to roughly £12,548 annually.
The new state pension applies to men born after 1951 and women born after 1953. Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, highlights that this increase reflects an inflation-beating boost scheduled for next April, giving retirees improved financial stability amid rising living costs.
However, this uplift may have tax implications. With the personal allowance stuck at £12,570 since the 2020-21 tax year, some pensioners could move into taxable income territory unless adjustments are made in the upcoming Budget. Many retirees already face tax on their income, whether due to deferred pensions or additional private pensions.
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A recent survey by Ipsos for Standard Life, involving 6,000 respondents, revealed that only 29% believe the Triple Lock will remain intact by their retirement. Catherine Foot, director of the Standard Life Centre for the Future of Retirement, notes widespread doubt about the state pension’s future, despite no current indications of policy changes.
Rachel Vahey, head of public policy at AJ Bell, adds that government expenditure on state pensions is projected to rise sharply, which might intensify debates over the sustainability of the Triple Lock mechanism in the years ahead.