Pensioners to face ‘rollercoaster’ squeeze on finances before record payments arrive – TrendyNewsReporters

Pensioners to face ‘rollercoaster’ squeeze on finances before record payments arrive

Pensioners face a rollercoaster of changes to their state pensions over the coming years, as public costs put triple lock promises in doubt, new research shows.

State pensions will be squeezed this year as payments struggle to keep up with the cost of living crisis, but they’re also set to rise by record levels in 2023, according to calculations from Steve Webb, former Pensions Minister, and a partner at consultancy LCP.

Mr. Webb based the analysis on the latest forecasts from the Office for Budget Responsibility.

He revealed that state pensions will rise by 3.1 percent this April, less than half of the rate of inflation, with the Spring Statement offering little help for pensioners.

However, by April 2023, state pensions are predicted to rise by 7.5 percent, which will be the biggest hike they have ever seen.

This increase will add over £10 per week to the basic state pension and over £13 to the new state pension.

Additionally, by April 2024, the rate of the new state pension will go through the £200 per week barrier.

In the 2024/25 tax year, basic state pensions are set to reach £157.70 per week, with new state pensions hitting £205.85 – an increase of 3.4 percent from 2023/2024’s hike of 7.5 percent.

Mr Webb warned, however, that before these rises arrive, many pensioners are going to have to endure one of the toughest 12-month periods on record.

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Rishi Sunak laid out support for savers across the UK, which includes money off council tax and energy bills, but retirees are unlikely to benefit from the Government’s efforts.

The one source of help that may be relevant to struggling pensioners is the extra £500m awarded for local authority hardship funds.

Pensioners in dire need of help will be able to approach their local authority for support.

The help is likely to be issued on a means-tested basis, with each council taking control of the finances.

Mr Webb said: “The Spring Statement will have been a big disappointment, and some pensioners may find themselves having to apply to their council for hardship funds simply to make ends meet.

“But next year should see the biggest ever cash rise in the value of the state pension, as pension rates catch up.

“The problem is that ‘jam tomorrow’ will not pay bills today.”

State pension triple lock under pressure

The Government has assured retirees the triple lock will be reinstated following a temporary pause but experts predict rising costs will once again call its affordability into question.

Mr. Sunak will raise the national insurance threshold to £12,570 in July, while also confirming the planned 1.25 percentage point rise to the rate will go ahead next month.

The raising of the threshold is set to cost the Treasury £6.25bn in the next tax year, with the cost rising to nearly £11bn by 2026.

This will put pressure on stretched public funding for state pension increases and other statutory benefits.

Ongoing inflationary pressures will also place the costs in doubt, with the Consumer Price Index surging to 6.2 percent in the year to February.

Jason Hollands, managing director at Bestinvest, said: “Soaring inflation is going to pile the pressure on employers – and especially the public sector which is heavily unionized – for steep pay rises, which in turn risks fuelling an inflationary spiral.

“While better than expected tax receipts have given the Government some headroom, surging inflation has also seen the cost of interest payments on index-linked gilts – which are linked to Retail Price Inflation – rise to £8.2bn too and these costs will likely rise further.

“Let’s also not forget that costs of the state pension are also set to rocket under the costly ‘triple lock’ commitment.”


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