In September last year, the 12-month rate for CPI inflation reached 3% for the first time since April 2012. Pensioners will therefore see their State Pension increase significantly this year.
Increases to the State Pension are currently governed by what is more commonly referred to as the ‘triple lock’. This effectively means that the State Pension will rise by the greater of inflation (as measured by the Consumer Prices Index (CPI) in the previous September), the increase in average earnings, or 2.5%. The Government has considered removing the ‘triple lock’ however this decision has been deferred to at least 2020.
Consequently, anyone receiving the full, flat-rate state pension will see this rise from £159.55 per week to £164.35 per week (an increase equivalent to almost £250 a year). Anyone who retired before April 2016 and is receiving a State Pension under the old system (i.e. the basic State Pension plus an earnings-related pension) will see their basic State Pension element rise from £122.30 to £125.95 per week.