(qlmbusinessnews.com Wed. 11th Sept, 2024) London, UK —
State Pension Set for £460 Rise Next Year Amidst Wage Data and Government Controversies
The state pension in the United Kingdom is projected to increase by £460 per year starting in April, according to the latest data on average earnings. This boost follows the “triple lock” guarantee, which ensures that the state pension rises annually by the highest of three figures: 2.5%, inflation, or average earnings growth.
Recent figures, covering the three months to July, revealed a 4% rise in total pay, significantly outpacing inflation. This increase suggests that pensioners can expect a considerable uplift in their payments next year.
The announcement comes as the government faces criticism for its recent decision to reduce the winter fuel payment for most pensioners. More than nine million pensioners are set to lose access to up to £300 this winter after the Chancellor, Rachel Reeves, revealed plans to introduce means-testing for these payments.
What is the State Pension Increase?
Currently, over 12 million people receive the state pension in the UK. According to the most recent figures from the Office for National Statistics (ONS), the new flat-rate state pension (for those who reached pension age after April 2016) is expected to rise to £230.05 per week, totalling £11,962.60 per year – an increase of £460. The old basic state pension (for those who retired before April 2016) is expected to increase to £176.30 per week, totalling £9,167.60 annually, representing a rise of £353.60.
Despite last year’s substantial £900 increase, not all pensioners receive the full amount. Many retirees also have additional income from workplace or private pensions. The exact figure for next year's state pension increase will be determined by the Work and Pensions Secretary, Liz Kendall, in conjunction with the upcoming Budget. This figure could be adjusted if official earnings data is revised.
Former pensions minister Steve Webb noted that the state pension would need to rise by at least £250 just to match inflation. He explained that only about £210 of the increase would constitute a real rise in income, once tax is considered. “Those who lose £200 or £300 in Winter Fuel Payments will still be worse off in real terms next April,” Webb warned.
Additional Support for Pensioners
Pensioners with low incomes may be eligible for additional financial support through pension credit, which could provide thousands of pounds annually. It also serves as a gateway to other benefits, such as reduced council tax and assistance with NHS costs. However, more than 800,000 eligible pensioners are currently failing to claim this benefit.
Economic Context and Interest Rate Projections
The ONS reported that the overall rise in pay, which includes bonuses, showed a marked slowdown from the previous month. This decrease was attributed to the absence of one-off bonuses paid to NHS and civil service workers in June and July 2023. Regular pay growth, excluding bonuses, also slowed to 5.1%, although it continues to rise faster than inflation.
Economists suggest that this continued deceleration in wage growth could prompt the Bank of England to reduce interest rates further later this year. Last month, the Bank lowered rates to 5%, down from 5.25%, marking its first cut since the pandemic began in March 2020. While the Bank of England is set to meet again next week, analysts are not expecting any additional cuts until later in the year.
Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, commented, “With wage growth easing off again, it’ll cement expectations that the Bank of England will deliver two interest rate cuts by the end of the year.”
The UK unemployment rate has also declined to 4.1% for the period from May to July, the lowest since January 2024. However, job vacancies between June and August fell to their lowest level in over three years, though they remain above pre-pandemic levels.
This News Story is brought to you by QLM Business News, your Digital Media Channel
Visit QLM businessnews.com
For more business news stories also follow us on Facebook, X and Youtube.
To Help qlm business news bring you more new stories like this, please like, share and subscribe.
Unlock unparalleled business growth and effortlessly attract a stream of new customers through QLM Business News Sponsored Advertising. Elevate your brand's presence and captivate your target audience with precision. Visit QLMbusinessnews.com and click on “Advertise” to harness the power of strategic advertising. Don't miss this unparalleled opportunity to propel your business to new heights of success!
Disclaimer: All images presented herein are intended solely for illustrative purposes and may not accurately depict the true likeness of the subjects, objects, or individuals referenced in the accompanying news stories.
