In the table below, Quilter have indicated what the weekly pensioner income would increase to if the 8.8 per cent earnings growth remained and the triple lock was unchanged.
2021/22 Article continues after advert | 2022/23 | |
Basic state pension | £137.60 | £149.70 |
New state pension | £179.60 | £195.40 |
*Assuming uprating of 8.8%, rounded to the nearest 5p based on full entitlement.
And, given all the high-level figures being touted, it is unsurprising the government is to review the triple lock, political promise or not.
Needed income
However, some experts think this high earnings figure is a temporary distortion. Sir Steve Webb, partner at LCP, says: "I do think this 8.8 per cent figure has been so distorted that it’s not a good guide to what has been happening to the living standards of the working-age population.
"On this basis I would support the use of some sort of ‘underlying’ earnings growth number of one smoothed over two years, but for this uprating only."
Moreover, he highlights that in August the Office for National Statistics updated their estimate of the figures, stripping out the impact of the pandemic. The ONS now says this would knock between 2.4 per cent and 3.8 per cent from the headline figure, which could save more than £3bn.
But even if some money can be saved for the exchequer thanks to the revised ONS figures being a more accurate reflection of wage growth, the fact remains that the majority of older people rely on the state pension to help boost their annual income.
Any increase is therefore greatly welcomed by the vast majority of pensioners, especially women for whom the pension gap is a stark reality.
While news often focuses on the people at the 'other end' of the pensions scale, for whom the lifetime allowance of £1.07m is a problem, the vast majority of pensioners today exist on an average workplace pension pot of just £61,000, according to the Pensions and Lifetime Savings Association, and many of these are women – either divorced, single or widowed.
Moreover, research from the Joseph Rowntree Foundation said even if the state pension increased by 8 per cent, it would still leave a £730-a-year income gap compared with the JRF’s Minimum Income Standard.
Earlier this year, analysis from retirement specialist Just Group, together with the JRF, found the average pensioner entitled to the full new state pension currently receives £9,340 a year.
This would rise to £10,087 from next April if average earnings growth reached 8 per cent this year, and the government applied the current ‘triple lock’ rules.
However, Just Group’s analysis showed even applying an 8 per cent rise would not be enough: The state pension income would still be £730 a year short of the £10,816 minimum income standard, the annual income needed to provide an acceptable minimum standard of living.
