As a result, the full basic state pension will rise in April in line with earnings by £13.30 a week (from £156.20 to £169.50), while the full new state pension will rise by £17.35 per week (from £203.85 to £221.20).
This is significantly below the minimum that the Pensions and Lifetime Savings Association, the leading pensions trade association, calculates that a single person needs to live on – £277 a week or £430 a week for a couple.
Although 8.5 per cent is a high percentage rise because of the triple lock, in absolute terms the rise is only up £17 per week. This 'widow’s mite' is not even enough to pay most council tax bills, now approaching £3,000 or £4,000 a year.
The triple lock is one of the sacred cows of modern politics. Nobody has the bottle to meddle with it, but perhaps the IFS has the right idea when it suggests: “Introducing an Australian-style system of long-run earnings indexation, with the commitment that each year the state pension will rise by at least inflation (and never fall in cash terms), would help to protect the spending power of pensioners in bad years, and prevent their state pension incomes from falling behind the income of the typical worker over the longer run.” Just a thought.
Byzantine complexity
The whole apparatus of the state pension just too complex. It will be decades before we reach the nirvana of simplicity.
As a financial journalist with more than 30 years’ standing, it is impossible for me to check the accuracy of DWP figures, even for my own entitlement. How can the ordinary person, without even a GCSE in maths, have any hope at all? We just have to trust the DWP to get it right.
Successive reforms and penny-pinching have left us in a Byzantine mess.
If there is any money to spare, I would like to merge the old basic state pension with the new state pension. Then we will no longer wait decades for oldies to die off before everyone is on one system. We could then see the end to the nightmarish legacy of contracting out.
Even the DWP forecasts that by the 2030s only 80 per cent of people reaching state pension age in the mid-2030s will have a full new state pension.
With such complex transitional arrangements, no wonder research quoted in the IFS report shows that only 13 per cent of 25 to 49-year-olds and 31 per cent of 50 to 64-year-olds can estimate the state pension to within £40 a week of the correct answer.
