State pension crisis: Britons warned of ‘terrible time ahead’ in 2022

State pension: Expert on difference between ‘old’ and ‘new’

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Those who are reliant on the state pension have been warned that 2022 could be a difficult year after the triple lock was suspended. Under the triple lock policy, the state pension increases every year by whichever is the highest of inflation, earnings growth or 2.5 percent. Rather than give pensioners an eight percent uplift in line with wages, which ministers argued was artificially inflated due to the release of coronavirus restrictions, a double lock was created for this year. This means the increase in April 2022 will be 3.1 percent – September’s inflation figure.

But experts and commentators have warned that this increase may not be enough given ongoing inflation fears.

In November, inflation in the UK hit its highest level in 10 years, reaching 5.1 percent.

With many fearing that inflation could remain above four percent for much of 2022, the 3.1 percent state pension increase could be a real-terms cut.

This led former pensions minister Baroness Ros Altmann to demand that the triple lock be reinstated.

Speaking to the Telegraph last month, she added: “We all knew that higher inflation was coming and that 3.1 percent was too low of an increase. But the Government wouldn’t listen.

“Pensioners have really been short-changed and are facing a terrible time ahead.”

Baroness Altmann also spoke to last month, and explained why the ditching of the triple lock could be so damaging.

She said: “We already know that pensioners were struggling to make ends meet if they only had the state pension payments, and given the rise of prices is affecting basic goods like food and energy, they will increasingly this winter have to choose between keeping warm and keeping fed.

“It could well cost lives.

“The fact is the Government has taken money off the poorest people in the country, and I don’t believe that is fair.

“I believe that is an absolute betrayal, I really do feel this was a very wrong decision.

“I hope the fuss we make this year will mean that this doesn’t happen again.”

Helen Morrissey, of stockbroker Hargreaves Lansdown, said many pensioners would struggle to meet mounting bills next year when the state pension rises by £5.55 a week.

This falls nearly £4 a week short of the £9.15 increase needed to maintain spending power, she said.

Ms Morrissey told the Telegraph last month: “If a pensioner is reliant on the state pension, they will find their money will not go anywhere near as far as it did in the coming months.

“Pensioners tend to spend a larger proportion of their income on things like gas, electricity and food and these have all increased by far larger amounts than inflation so many people will struggle.”

The Government could also come under pressure to slow down its plans to move the retirement age.

It recently moved from 65 to 66, with an increase to 67 due in 2028.

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Recent analysis by consultants LCP found moving from 66 to 67 should be delayed by more than two decades.

Sir Steve Webb, a partner at LCP, told iNews: “Unlike previous reviews, which have all been about speeding up pension age rises, this one will have to wrestle with the fact that the expected life expectancy improvements have not materialised and the current schedule for pension age increases now looks rather aggressive.”

In better news, those aged 23 or over who are paid the national living wage are set for a wage increase in April to £9.50 an hour, and their workplace pension contribution will also get a boost.

Steven Cameron, pensions director at Aegon, told iNews last week: “Currently, eligible employees working full time on the national living wage will have a total pension contribution of £798 per year.

“This will increase to £884, meaning they will have an additional £86 going into their pension over the course of the year.

“While this might not seem a lot, even a small increase today with compound investment growth over many years will prove very beneficial to future retirement savings, especially for those just starting out in their careers.”

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