State pension payments are expected to rise by more than 4% by the end of the year even though the Government suspended the “triple lock” earlier this year
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Retirees are set to see the biggest state pension increase in almost a decade.
State pension payments are expected to rise by more than 4% by the end of the year – in line with projected inflation, as measured by the Consumer Prices Index (CPI).
Work and Pensions minister Thérèse Coffey announced last month the “triple lock” on pensions would be temporarily suspended as the pandemic had “distorted wages”, reports the Express.
It had ensured state pension payments would rise in line with whichever is highest out of earnings, inflation or 2.5 per cent.
Ms Coffey decided to remove the wage element of the triple lock and instead offer a “double lock” for 2022, where state pensions would increase in line with the higher of 2.5 percent of inflation, to save the Government billions.
She told MPs in September: “Millions of people have moved from furlough back into work and we are witnessing a surge in the labour market with over a million job vacancies.
“The combination of these has resulted in a distorting effect on wages, with a statistical anomaly.
“Figures will be published in October but provisional ONS figures show an increase in earnings of 8.3 per cent, which is over two percentage points higher than any time over the last two decades.”
However, even under the double lock pensioners are likely to see a significant increase after the Bank of England revised its inflation forecast for the remainder of the year.
In a statement, the Bank said: “CPI inflation is expected to rise further in the near term, to slightly above 4 per cent in 2021 Q4, owing largely to developments in energy and goods prices.”
In 2012/13, state pension payments rose by 5.2 per cent but since then no increase has reached 4 per cent, according to a research briefing from the House of Commons Library, meaning pensioners could be on the verge of the biggest rise seen in nearly a decade.
The Conservatives broke a manifesto promise when they suspended the triple lock, but Ms Coffey has said the Government is “committed to ensuring that older people can enjoy their retirement with security, dignity and respect”.
She said the full state pension has increased by more than £2,000 a year since 2010 and the number of pensioners in absolute poverty has fallen by 200,000.