The Government has confirmed the triple lock pledge for state pension payments is being reintroduced later this year. This comes as pensioners struggle to manage the annoying pressures of the cost of living crisis, which sees inflation sitting at 10.5 percent and energy costs forecast to hit £3,000 in the coming months.
What is the triple lock?
Since 2010, the Government has made a promise to the British public to raise state pension payments by either inflation, average earnings or 2.5 percent every year; whichever is the highest figure.
With wage figures being artificially inflated during the pandemic, the triple lock was temporarily suspended.
State pensioners only saw their payments rise by 3.1 percent due to the link to average earnings being scrapped for a year.
However, Chancellor Jeremy Hunt confirmed in last year’s Autumn Statement that the triple lock would make a return.
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How much will your state pension be?
Retirees on the new state pension currently get £185.15 per week, while those on the basic state pension come to £141.85 per week.
After the 10.1 percent is applied to payments, the full new state pension will jump to £203.85 weekly.
At the same time, the basic state pension will rise to £156.20 a week with the triple lock coming back.
The basic state pension is accessible to older people who turned the state pension age prior to April 2016.
Ray Black, the managing director and founder of Money Minder, broke down what lies ahead for pensioners later this year.
He explained: “It’s reasonable to expect that 2023 should be a better year for pensioners than 2022 was, because of the increases in the state pension.
“The recent reductions in the wholesale price of oil and gas will hopefully benefit the UK and global economy in 2023 as it helps to bring down the cost of manufacturing, services imports and exports and lower prices feed through to us all. This is all presuming the prices stay down.
“In 2022, a £300 grant was given to all pensioner households to help cover the rising cost of energy over winter and I’m hopeful that similar measures to help pensioners and low income earners will be announced in the April 2023 budget, however, nothing can be guaranteed in the current economic backdrop.
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The pension expert highlighted why the return of the triple lock is a crucial lifeline for older people amid the cost of living crisis.
Mr Black added: “One exceptionally helpful and positive move by the Government in the 2022 Autumn Statement was to reinstate the pension triple lock which means that from April this year both the basic and new state pension will rise by just over 10 percent to £156.20 per week and £203.85 per week respectively.
“This will be a very welcome boost to pensioner incomes in the short term, however, they will also need to ensure their savings and pension plans are working really hard for them too.
“For those savers keeping their money in cash, the returns are just not enough to keep up with the current high levels of inflation, and each year that goes by, their money is effectively going down in value because it just won’t have the same spending power in the future.”
According to the money expert, Britons close to state pension age should consider budget planning to achieve a better retirement.
People are being encouraged to start early in determining the basic standard of living, including key expenditures, which is right for them by using online budget calculators.
After this has been done, future retirees can factor in discretionary spending which includes expenses such as holidays, spending on hobbies and sports, eating out and gifts for friends and family.
The triple lock inflation-hiked increase to state pension payments will be implemented in April 2023.