THE exact amount the state pension will rise by is set to be confirmed in a matter of weeks.
Millions of people are expected to get a bumper rise of £460 to their state pension next year.
The exact amount the state pension will rise by is set to be confirmed in a matter of weeks[/caption]
However, this will not be official until September’s inflation rate is released by the Office for National Statistics.
That’s because the triple lock system sees the state pension rise in line with whatever is highest out of: wages for May to July, 2.5% or September’s inflation figures.
Growth in employees’ average total pay was 4% in the three months to July.
While the UK’s rate of inflation remained at 2.2% in August after rising to the same figure the month before.
With inflation highly unlikely to rise above 4% in September, it means the state pension is expected to rise from £11,502.40 to £11,962 per year – a £460 boost.
Although, this will not be confirmed officially until October 16, when the previous month’s rate is announced.
Weekly it would mean a rise from £221.20 to around £230, an increase of almost £9 a week.
Meanwhile, older pensioners who retired before April 2016 will see their weekly payment rise from £169.50 to £176.30 – an increase of £6.80.
Annually, their payments will rise from £8,814 to £9,167, adding £353 a year.
Although it’s worth noting, people on the old system who also have “additional” state pension (SERPS) will see that part of their pension rise only in line with inflation which hasn’t been published yet.
Any decision on a pension increase will be made by Secretary of State Liz Kendall ahead of October’s budget.
The state pension is increased each year in line with the triple lock mechanism, which all major political parties committed to before the general election in July.
Earlier this month, Chancellor Rachel Reeves reaffirmed the Government’s backing of the triple lock until the end of this Parliament.
How much is the state pension?
State pension payments increase every April.
This year, the full rate of the new state pension rose from £203.85 a week to £221.20 – rising 8.5% in line with last September 2023’s wage growth.
This equates to £11,502.40 in total over a year.
This is what the state pays those who reach state pension age after April 6, 2016.
The amount of new state pension you receive depends on your National Insurance (NI) record throughout your adult life.
If you have made at least 35 years of qualifying NI contributions or NI credits you may qualify for the maximum amount.
You can get NI credits if you’re caring for a relative or raising children instead of working, for example.
How does the state pension work?
AT the moment the current state pension is paid to both men and women from age 66 – but it’s due to rise to 67 by 2028 and 68 by 2046.
The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age.
But not everyone gets the same amount, and you are awarded depending on your National Insurance record.
For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings.
The new state pension is based on people’s National Insurance records.
Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension.
You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit.
If you have gaps, you can top up your record by paying in voluntary National Insurance contributions.
To get the old, full basic state pension, you will need 30 years of contributions or credits.
You will need at least 10 years on your NI record to get any state pension.
How do I claim the state pension?
You won’t automatically get the state pension – you need to claim it once you’re eligible.
You should receive a letter no later than two months before you reach state pension age, explaining what to do.
You can find out more here.
You can choose to defer getting the state pension – you don’t have to take it as soon as you are eligible when you reach state pension age.
Leaving your state pension untouched can boost the amount you eventually get.
If you opt to defer your state pension, your entitlement increases by the equivalent of 1% for every five weeks you do so.
As the state system can be tricky to navigate, a key part of any pension planning involves requesting a state pension forecast.
This will help you get your head around how much you could be eligible to receive, and from what age.
Top tips to boost your pension pot
DON’T know where to start? Here are some tips from financial provider Aviva on how to get going.
- Understand where you start: Before you consider your plans for tomorrow, you’ll need to understand where you stand today. Look into your current pension savings and research when you’ll be eligible for the state pension, and how much support you’ll receive.
- Take advantage of your workplace pension: All employers are legally required to provide a workplace pension. If you save, your employer will usually have to contribute too.
- Take advantage of online planning tools: Financial providers Aviva and Royal London have tools that give you an idea of what your retirement income will be based on how much you’re saving.
- Find out if your workplace offers advice: Many employers offer sessions with financial advisers to help you plan for your future retirement.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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