Tomorrow brings the biggest ever boost to pensioners’ payments in an Easter Monday windfall. A 10.1 per cent increase has been announced in the state pension, in line with the Government’s triple lock policy.
It means payments go up by whichever measure is greater out of 2.5 per cent, inflation and wage growth. And it is no surprise to know that skyrocketing inflation represents the biggest percentage increase.
And that means people on the new state pension will see their payments shoot up from £185.15 to £203.85 a week. With the cash usually arriving once every four weeks, the hike will see £815.40 landing in accounts each month.
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But of the 12.6million people drawing a State Pension, only 2.9million (23 per cent) are on the new State Pension. The remaining 9.7million (77 per cent) get the old basic State Pension that was in place before April 2016. This pays out £141.85, going up to £156.20 from April 10. Paid every four weeks, it will see £624.80 go into accounts – almost £200 less per month than the new pension.
There are other variations that can mean a person gets less than these figures. That’s because you need 35 qualifying years of National Insurance contributions to get the maximum new State Pension. You need 10 qualifying years to get any pension at all.
Lower amounts of National Insurance paid into the system by many workers mean the average new State Pension for a man is £175.84, while for a woman it’s a similar but slightly lower £170.52.
For the old basic State Pension, if you’re a man you usually need 30 qualifying years if you were born between 1945 and 1951, and 44 qualifying years if you were born before 1945. And if you’re a woman you usually need 30 qualifying years if you were born between 1950 and 1953, and 39 qualifying years if were born before 1950.
The average amount of the basic State Pension is £178.60 for a man and £152.12 for a woman. There have been calls for the Goverment to equalise the new and old State Pension amounts, with campaigners saying those on the earlier scheme are treated like second-class citizens.
One pensioner told BirminghamLive: “I’m on the old State Pension which is much lower and even then, I don’t get the full amount. I was born in 1943 and back then I needed 44 years of National Insurance contributions for a full pension. But I only had 41 because I was later a student.
“Shortly after retiring the number of years of contributions needed for the old basic State Pension was reduced to 30 and I just missed out on qualifying. It means that I do not get the full rate of the old State Pension and was too born too early to get the higher amount of the full new State Pension.”
In addition, around 500,000 older people who have moved overseas won’t get a State Pension rise at all. It instead remains frozen at the rate that was in place when they were entitled to claim it. But those living in an EU country, the EEA/EFTA states (Norway, Iceland and Liechtenstein) or Switzerland, along with some other countries including the USA, will still get all the annual increases applied.
What the Government said
Minister for Pensions Laura Trott said: “We’re delivering the biggest State Pension increase in history and boosting Pension Credit for those on the lowest incomes, ensuring pensioners across the country are protected – now and in the future.
“Thanks to the Triple Lock, for the first time ever the full rate of the New State Pension will be over £10,000 per year, while the Basic State Pension will be over £3,050 a year higher than in 2010, making a real difference to the lives of over 12 million pensioners. Making sure that pensioners’ incomes and those of households across the country are protected in difficult times are marks of a compassionate Government – delivering for the British people.”
How much pensions are going up
New State Pension
- Full rate – increasing from £185.15 to £203.85
Old State Pension
- Category A or B basic pension – increasing from £141.85 to £156.20
- Category B (lower) basic pension (spouse or civil partner’s insurance) – increasing from £85 to £93.60
- Category C or D (non-contributory) – increasing from £85 to £93.60
Additional pension
- Maximum additional pension (own + inherited) – increasing from £185.90 to £204.68
Widow’s Pension
- Widow’s pension standard rate – increasing from £126.35 to £139.10
Pension Credit
Standard minimum guarantee
- single – increasing from £182.60 to £201.05
- couple – increasing from £278.70 to £306.85
Additional amount for severe disability
- single – increasing from £69.40 to £76.40
- couple (one qualifies) – increasing from £69.40 to £76.40
- couple (both qualify) – increasing from £138.80 to £152.80
Additional amount for carers
- Increasing from £38.85 to £42.75
Savings credit
- threshold single – increasing from £158.47 to £174.49
- threshold couple – increasing from £251.70 to £277.12
- maximum single – increasing from £14.48 to £15.94
- maximum couple – increasing from £16.20 to £17.84
Children
- First child born before April 6 2017 – increasing from £66.85 to £72.31
- Subsequent children – increasing from £56.35 to £61.88
- Disabled child lower rate – increasing from £30.58 to £33.67
- Disabled child higher rate – increasing from £95.48 to £104.86
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