State pension will rise by £343 a year from April 2020

16 October 2019

Retirees on the new state pension will receive a guaranteed increase of 3.9% from April

Image

The amount by which the new state pension rises is determined by the so-called state pension ‘triple lock.’

This guarantees that the state pension will rise in line with inflation, wage growth or 2.5%, whichever is highest for the September figures.

Inflation for September 2019 was today confirmed at 1.7% on the CPI measure. This means the state pension will rise in April 2020 by 3.9%, the wage growth figure for the three months to July 2019.

See the table below for the amount by which state pension payments will increase.

  2019/20 2020/21 Increase (per week)
New State Pension £168.60 £175.20 +£6.60
Basic state pension (single) £129.20 £134.25 +£5.05
Basic state pension (married) £206.65 £214.75 +£8.10

Source: Royal London, 16 October 2019. Pension rates in 2020/21 based on 3.9% uprating, assuming rounding up to nearest 5p.

Steve Webb, director of policy at Royal London and former pensions minister notes that the removal of the free TV licence for many will offset these increases.

“The pension rise will be great news for those not affected by the TV licence changes. 

"But there is a sting in the tail for around 1.7 million single people over 75 who will experience a squeeze in their standard of living once they have paid over £150 for a TV licence next year. 

“This makes it all the more important that older pensioners check if they might be entitled to claim pension credit so that the poorest pensioners do not face this squeeze.”

The weekly increase in the new state pension amounts to £343.20 per year. However, this is reduced to around £193 when factoring in the added cost of a £150 colour TV licence over 75s will have to pay from next year. 

Political problems

Added to the TV licence fee issue, which is the subject of much debate, the triple lock continues to be a contentious political policy.

Tom Selby, senior analyst at AJ Bell, explains: “Such a bumper increase clearly comes at a cost to the Exchequer, and with a general election seemingly inevitable the commitment of politicians to this policy is likely to be tested.

“On the one hand the triple-lock is quite an odd policy, increasing the real value of the state pension arbitrarily when earnings and inflation are low.

“It could be argued a more rational policy would establish what level a ‘fair’ state pension should be, raise the benefit to that amount and then remove the 2.5% element.

“However, it is likely the issue will become weaponised in the cauldron of an election battle as politicians desperately seek voter approval.

“Given older people usually head to the ballot box in the greatest numbers, it is extremely unlikely any party will propose significant changes to this popular policy in their respective manifestoes.”

Inflation and wages

Inflation remains below the Bank of England target of 2%. The most recent figures reported by the Office for National Statistics (ONS) today show the CPI measure of inflation saw price rises of 1.7% in September.

The CPIH measure, which includes housing costs and is widely perceived to be more accurate showed the same, at 1.7%.

Wages, reported the day before, grew by 3.8% in the three months to August. this was slightly down from 3.9% in the previous period. The earlier 3.9% figure, for the three months to July, is what is referred to for the state pension increase decision however. 

Comments

End free TV Licence for all

I believe the free TV Licence should end for all, those on GPC should not receive any further benefits or freebies once they receive equal to the new state pension as it makes those that contribute worse off than those who never. The annual increase for old state pension should be at least equal in cash terms to the new state pension as the difference between the to get wider each year which is unfair to those who contributed for 50 years.

Married women’s stamp

Also why should the widowed and divorced females that did not pay full stamp get the same benefit now as the the ones that paid full stamp. They were saving money by not paying the full stamp. Are the ones that paid the full stamp going to get their contributions back. Of course not. !!!!

Why only state New Pension Rise

Why don't you quote the pension rise value as £old/£new instead of just quoting the new pension rise value. The old pension is getting degraded in comparison to the new pension each year, whatever increase in cash is given to new pension should be given to those on the old pension to seal the gap between them, it should be fixed at £40 a week difference if it must be a 2 tier system to make the oldest the poorest even though we contributed for 50 years. Those on new pension do not pay more for their utilities, food and all other essentials, maybe the government think the oldest should have colder homes and poorer food to help kill them off.

Increase in state pension

Agree with the above post.

State pension increase

This is a joke! I'm on a slightly enhanced state pension topped up by Pension Credit and 3.9% is more than going to be offset by things like a 25% hike in my electricity bill. As a housing association tenant I'm not badly off with no rent or repair bills to worry about but anyone who owns their home must be struggling.

The reality is that the value of the state pension has steadily declined since I retired at the beginning of 2012 and that decline has in the main been caused by an index-linking strategy that is, as best, creative accounting.

State Pensions

Why are there TWO different pensions??, and why are they not on the same level as Euro countries?.

State Pensions

The State pension should be in line for the same increase for older pensions as new ones, why o why is it when we bost at being one of the richest countries we cannot look after the pensioners who contributed to that being so, Stop giving Aid to foreign countries should be looked at, time to think of the countries old, Still working at 77 Having to, to survive.

Military Wives - with husbands serving around the world.

The government suggested they could get their pensions boosted, my wife was refused due to a date ban. That is why so many have been unable to take advantage of the supposed offer. She now only gets half a state pension.

State Pension

Employees all paid the National Insurance payment, this was then topped up by Employers to provide a pension at retirement.
This payment is not a benefit but earnings from these have been stolen and squirrelled away by governments to use.
We would all be living a life of luxury if we got what we paid in to the pot.

Tax payers money

When everything is running smoothly at home. NHS, Police, Prisons, armed forces, schools, doctors, nursing staff, roads/infrastructure, housing, care of the elderly, etc, etc, etc then that is the time we can consider helping others. Our hard earned tax should be spent giving the people of the UK a safe and comfortable standard of living.

Difference in rates

I worked for 50 years and got my pension at60 I am only on £143 per week where as the new rate is £175 that's £30 per week more.even if they have not putin as much as me .i will only get £5 rise they will get £6.60 how is that fair.i know people who haven't worked as long as me in years and still get more. In any case we keep being told the living wage for the ones on benefits is £25,000 a year I get about £ 8,000 a year pension not a living wage but I have to manage . The system. Is absolutely dire needs starting again. Wish I was in power I could do better that the lot of them " Angry !!!

In reply to by Jane apple (not verified)

Difference in rates

You seem to be forgetting that women like me won't be getting our pension until we are way beyond age 60. I have to wait until I'm 66 to get mine, it changed just as I reached age 60. So that's 6 years with no pension at all. Does that make you feel any better?

In reply to by Jane apple (not verified)

Difference in rates

You seem to forgetting that you got your state pension at age 60. I got to age 60 just as they moved it. I now have to wait until I'm 66 to get my pension. Added to that, we women who fall into that category were not even informed about the change. I hope that makes you feel better.

State Pension.

The triple lock on the state pension is an absolute insult to older people. The increase each year only replaces the cost of living from the previous year. The % rise on the state pension each year in monetary terms is next to nothing, the same % rise on the average wage is very nice thank you. Overseas aid, which is taxpayers money, should be cut to help all older people to live a dignified life. After all, the Government or the BBC didn't worry about stopping the TV licence for older people. It is odd how Lords sitting in the House of Lords can claim £310 a day and a pensioner has to survive on less than half of that ever WEEK. It seems after the age of 65 all the people who helped build the country with their hard work end up being a burden to the state.

In reply to by Greg (not verified)

State pension

I agree entirely with the above the people who fall asleep or just dont turn up in the house of Lords get almost double per day than a pensioner gets in a week it's an utter disgrace and nothing more than a corrupt society paying off sycophants in parliament pensioners need to make them pay by not voting for any of these useless individuals and the house of lords should be abolished

Poverty

What about the 14 million in or at the poverty line? What is out great nation going to do for them?

State Pension

Given the current publicity of the WASPI, perhaps more publicity should be given towards the Basic State Pension.

Millions of us paid into the system for 50 years and receive c£40 per week less that the new pension, despite the new pensioners only needing to contribute for 35 years. This gap is being moved further apart due to the same annual increases for each pension.

Pensions

Why are our pensions less than EU ...their pensions are given at the rate of pay they get on retirement ...it would be more dog ified for us to having a living wage as we did when in work we are expected to live on a third of wages now ...and we have the same bills to pay gas electric council tax rent food heating etc but we are expected to.live in poverty in old age after working for over 50 years... this is a disgrace to our pensioners and our country... Ty one our country was put first and our people looked after ...

New pension

I don’t know how you get that you are on less on old pension. My husband got his pension at 60. I had to wait til 65 I worked all my life paid full stamp and still get 60 a month less on the new pension rules than my husband on the old pension.

Add new comment