In normal times this would be cause for celebration but not today, as the cost-of-living squeeze continues to destroy living standards.
Despite the huge rise of almost £1,000 a year, the value of state pensioner incomes will actually shrink in real terms as the current inflation rate is even higher.
Now millions will be crossing their fingers and hoping that inflation does start to slide as the year progresses, finally easing the pressure on their pockets.
Each year’s state pension increase comes through from the first Monday after the new financial year begins on April 6.
This year, that means tomorrow.
The triple lock has been restored for the 2023/24 tax year, after being suspended for one year, in welcome news for pensioners.
Under the triple lock, the state pension rises each year in line with earnings, inflation or 2.5 percent, whichever is highest.
The inflation figure for this financial year is based on last September’s number, when consumer price growth stood at 10.1 per cent.
This is handing pensioners a much-needed double-digit increase.
Unfortunately, February’s inflation was even higher than that, shocking analysts by climbing to 10.4 per cent.
This means tomorrow’s state pension increase is trailing still prices in the shops.
Worse, essentials are rising at an even faster pace than 10.1 percent, with food prices rising more than 18 percent.
Under the triple lock, a single pensioner on the maximum new state pension, paid to those who retired from April 6, 2016, will get £10,600.20 a year.
This is a rise of nearly £972 a year, just shy of £1,000, but Andrew Tully, technical director at Canada Life, said it still isn’t enough to keep up.
“Food price inflation alone has added £837 a year on average to household bills since last April, while rising energy costs have added another £1,223.”
This has left millions of pensioners feeling stressed and worried. “Even a household where a couple both receive the full state pension will see the triple lock increase wiped out by today’s price rises,” Tully added.
Many on the old basic state pension, paid to those who retired before April 6, 2016, are likely to find life even tougher.
This also benefits from the triple lock which means it increases by 10.1 percent, but the percentage increase is calculated from a lower starting point.
The basic state pension is worth a maximum of just £8,121.20 a year for a single pensioner. “Those on the full basic state pension get just £746 extra a year, others even less,” Tully said.
Basic state pensioners ofte see their retirement income boosted by State Second Pension (S2P) and the state earnings-related pension scheme (Serps).
However, many of the oldest and poorest don’t get any additional state pension, with women at particular risk.
They have to scrape by on whatever benefits they can claim on top of their state pension.
Others fall short because they did not make enough National Insurance (NI) contributions to qualify for the full state pension.
READ MORE: £10,600 state pension hike is here yet millions are denied full sum
Life should start to get a little easier as most analysts now expect inflation growth to slow as summer approaches, with Chancellor Jeremy Hunt claiming it will hit 2.9 percent by the end of the year.
If that happens, Monday’s state pension increase will look a bit better, although its restoration still won’t make up for scrapping the triple lock last year.
The big question now is whether the triple lock will survive in 2024 and beyond. While Prime Minister Rishi Sunak is unlikely to scrap it directly before the next general election, due next year, its long-term future is in doubt.
Steve Lowe, group communications director at later life specialist Just Group, said the government’s recent decision not to accelerate the state pension age hike to 68 may backfire on today’s pensioners. “It has focused attention on the long-term viability of the triple lock and the cost of the state pension to the public purse.”
Given the damage done when the triple lock was suspended for one year, pensioners will be crossing their fingers and hoping it won’t be abandoned for good.
A DWP spokesperson said this year it will spend more than £110billion on the state pension, and the full basic state pension will be more than £3,050 a year higher than in 2010.”
The triple lock has certainly helped pensioners play catch up. Yet it still isn’t enough as prices have been rising at a far faster pace.
