Hundreds of thousands of people are being warned they will out on state pension cash being dished out in the UK.
State Pension payments in April will likely be dictated by the earnings growth measure of the Triple lock. The Triple Lock ensures that the New and Basic State Pensions rise each year in line with either the average annual earnings growth from May to July, the Consumer Prices Index (CPI) in the year to September, or 2.5 per cent.
August’s CPI was recorded at 2.2 per cent, while the average earnings growth for the 12 months to July dropped from 4.5 per cent to 4 per cent – making it the current leading measure of the Triple Lock. Although the new State Pension rates won’t be confirmed until the Autumn Budget, this offers little solace to nearly half a million pensioners who will not receive any increase.
Based on the latest earnings growth figure, those on the full New State Pension could see their weekly payment rise by £8.85, from £221.20 to £230.05. As payments are typically made every four weeks, this equates to an increase of £920.20.
This would result in annual payments rising by £460, from £11,502 to £11,962, over the 2025/25 financial year.
Similarly, someone on the full Basic State Pension could see their weekly payments increase by £6.80, from £169.50 to £176.30, which amounts to £705.20 every four-week payment period, reports the Daily Record.
While most State Pensioners can look forward to their annual increase next year, a significant number will miss out. The International Consortium of British Pensioners (ICBP) has highlighted that around 453,000 expatriates are battling with ‘frozen pensions’ and will see no benefit.
The ICBP’s ‘End Frozen Pensions’ campaign is gaining momentum in its fight to “end the injustice” faced by UK citizens who have moved to countries such as Canada, Australia, and New Zealand. Due to the lack of reciprocal agreements with the UK, their pensions do not increase with time and remain at the rate they were when they left the UK, despite the National Insurance Contributions they made during their working life.
To qualify for the State Pension, a person must have contributed to the National Insurance for at least 10 years, with approximately 35 years needed for the full pension; this number could be higher for those who were ‘contracted out’. The Canadian Alliance of British Pensioners has provided estimates suggesting that the new Labour Government could align all frozen State Pensions to current levels at an additional cost of just £50 million.
Graham Dodd, a board member of the Canadian Alliance of British Pensioners, told the Daily Record: “The Government’s line is that they only uprate where there is a legal requirement to do so. The folly in this is that it is in their hands to pass the necessary legislation.
“It is true that should the UK make all the existing and future frozen pensioners whole by bringing them to the level they would have been if they had never been frozen then the cost would be £0.94 billion. However, in all previous cases of unfreezing, the UK has never made all the existing and future frozen pensioners whole by bringing them to the level they would have been if they had never been frozen.”
Dodd highlighted that when State Pensions for expats in the USA were unfrozen, it was not a case of backdating payments but rather applying the current rate of annual increase to their previously frozen pensions.
He pointed out that the often quoted figure of £0.94 billion needed to rectify the situation represents just 0.7 per cent of the total State Pension expenditure forecasted for 2023/24.
Dodd went on to specify that the exact amount required to settle the issue for the 113,000 British retirees in Canada is £26 million – a fraction at 0.019% of the over £120 billion total State Pension budget set for 2024, or £11 million if tackled in 2025.
For the entire group of 453,000 impacted pensioners, the sum necessary to amend pensions for the fiscal year 2024/25 stands at £49 million. In subsequent years, the costs are projected at £34 million for 2025/26 and £35 million for 2026/27, each amounting to roughly 0.02 per cent of the total State Pension spending.
These calculations are based on the UK Government’s previous projection using the average earnings growth measure for the Triple Lock at 3.6 per cent.
Predictions for the State Pension increase have been calculated based on the latest ONS figures, using a 4.0 per cent earnings growth as the multiplier.
The Full New State Pension is set to rise from £221.20 to £230.05 weekly, from £884.80 to £920.20 every four weeks, and from £11,502 to £11,962 annually.
The Full Basic State Pension is expected to increase from £169.50 to £176.30 weekly, from £678 to £705.20 every four weeks, and from £6,814 to £9,167 annually.
Chancellor Rachel Reeves is due to announce the annual State Pension increase during the Autumn Budget on October 30.
