The retirees are on track to receive a pension triple lock pay rise that will be nearly double the rate of inflation in 2023. The inflation-busting rise will come as a relief to pensioners struggling with soaring energy bills and food costs.
On Wednesday, 19 October, the inflation figure for September will be published and used to calculate April’s state pension rise.
Many economists believe there is little chance the current 9.9 percent rate will drop significantly.
If inflation remains at 9.9 percent, the new state pension will rise by £18.35 a week, from £185.15 to £203.50. An annual uplift of £962.
The basic state pension, which is paid to those who reached state pension age before 2016, would increase from £141.85 to £155.90.
For those receiving the full new state pension, this will push them over the £200 a week mark for the first time.
And in another bolster to pensioner purses, finance experts predict inflation will have cooled to around five percent next spring.
Tom Selby, of stockbrokers AJ Bell, said: “If inflation is at or close to its peak in September this year and then falls away, the state pension increase applied next year could far outstrip the level of inflation retirees experience in 2023.”
Inflation is now forecast to fall to 5.2 percent by the second quarter of 2023, according to analysts Capital Economics.
Under the Government’s triple lock guarantee, the state pension is increased every April in line with the highest of the previous September’s inflation rate, wage growth figures or 2.5 percent.
The triple lock was suspended this year denying 12m elderly people a large increase in line with earnings growth because the aftermath of the pandemic skewed wage inflation.
The Government spent £110.6bn on state pensions in 2022/23 and the cost of uploading the triple lock bill is set to rise by £11.9bn next year, according to calculations by AJ Bell.
However, despite growing concern about the cost of the popular policy, ministers have confirmed the triple lock will be used this year.
Simon Clarke, chief secretary to the Treasury, said: “Next year, the triple lock will apply for the state pension. Subject to the Secretary of State’s review, pensions and other benefits will be uprated by this September’s CPI which, on current forecasts, is likely to be significantly higher than the forecast inflation rate for 2023/24.”
Adam Walkom, co-founder of Permanent Wealth Partners, said: “We would all like to believe inflation is coming down, but just like the Red Queen in Alice in Wonderland, to do that we may have to believe in six impossible things before breakfast.
“Inflation rates just ticked back slightly higher in the US. this month, so it is hard to see them coming down here.
“The Treasury was correct to suspend the triple lock following the coming out of lockdown because it was a statistical anomaly, but it is much harder to justify doing it this year with all prices rising.”
Scott Gallacher, director at Rowley Turton, added: “I think we’re about to hit peak inflation, and I suspect this September’s figure will be around 11 percent.
“The good news is thereafter, inflation should fall back as many of the drivers, high oil prices, shipping costs, etc. have already peaked and started to fall.”
Steve Perera, a finance expert at Britannic Place Financial Management, said: “The Government has committed to implementing the triple lock for the remainder of the Parliament.
“However, with the tax reductions introduced by the mini-budget and the recent pledge by the Prime Minister not to cut Government spending together with the potential to save billions by suspending the Triple Lock for a second year, this may prove a very difficult square to circle.”
The Prime Minister’s official spokesperson denied that a bumper income boost for pensioners would be inflationary despite ministers warning over the impact of strong pay growth on prices.
The spokesperson said: “I think the Chancellor needs to consider it all in the round and I think the view is we can meet that commitment without stoking those inflationary pressures.”
Caroline Abrahams, Charity Director at Age UK, said: “Despite the help already announced, energy bills have more than doubled since this time last year and many of the poorest older people are struggling to get by.
“We’re already hearing of older people making drastic cuts to their way of life just to be able to afford to pay their bills in the coming months. It’s not just luxuries they’re cutting back on – we have even heard of some older people switching off medical equipment, their fridge and living in the dark for periods, all of which is alarming because of the risk to their health.
“Commitment to reinstating the triple lock next April is very welcome but the Government also needs to raise the level of benefits, including pension credit, so they are increased in line with inflation. None of this will kick in until April anyway – those on the lowest incomes will need more support over the next 6 months to get through the months ahead.
“We urge anyone who is worried or struggling to contact Age UK for help. We’re here for older people 365-days-a year and can offer advice and support.”
