State pensioners set for a boost to their payments to their payments next April in line with the triple lock may in fact face a “real loss of income”.
Payments will likely increase 4.1 percent in line with the triple lock, providing a £473.60 a year increase to the full new state pension, which will go up from £221.20 a week to £230.30 a week.
Those on the full basic state pension will see their payments rise from £169.50 a week to £176.45 a week, meaning they will get a £361.40 a year boost.
But millions of pensioners will this winter lose access to the Winter Fuel Payment, which is worth £200 or £300, making a huge dent into this increase. Those who are not on the full state pension may see their increase entirely wiped out as they lose the payment.
Richard Parkin, head of Retirement at BNY Investments, said: “The triple lock is intended to ensure pensioners’ standard of living doesn’t fall behind that of workers.
“The loss of the Winter Fuel Payment is a real loss of income and so sets people back in terms of their standard of living regardless of how wealthy they are.”
He pointed out that only one in four state pensioners are on the full new state pension, and so are in line for the £473.60 yearly boost next year.
Mr Parkin explained: “How the State Pension increase affects others is complicated and for those on lower pension levels, mostly older pensioners, the triple lock certainly doesn’t cover the loss of the Winter Fuel Payment and inflation.
“The hope is that Pension Credit will be increased in line with State Pension increases but we’ll need to wait for the Budget to see how the government tackles this.”
The law states that benefits such as Pension Credit have to increase at least in line with the inflation figures for the previous September, though the Government may choose to provide a more generous boost to payments.
With the September figure for inflation at 1.7 percent, this would increase the income top-up element of Pension Credit to:
- Single claimants – income top-up to £221.90 a week, up from £218.15 a week
- If you have a partner – income top-up to £338.65, up from £332.95 a week.
Another pensions expert warned the increase to the state pension will make little difference to people’s real-terms income in light of the loss of the Winter Fuel Payment.
Greg Marsh, CEO of AI money-saving tool Nous.co, said: “For millions of pensioners the increase will be almost entirely cancelled out by the loss of their Winter Fuel Payment.
“This will leave significant numbers struggling to afford their bills just as we head into winter, so it’s crucial that people make savings where they can.”
Mr Marsh urged pensioners to check if they can make savings on their energy bills with a simple switch, adding: “The cheapest way to pay for energy is by direct debit – households who pay by cash or cheque currently pay around £100 per year more than direct debit customers.
“Most households aren’t on a fixed deal right now and can save by switching providers with services like Nous.co. The majority can save the better part of £150 on their energy bills.”
