New state pensioners are being handed a financial boost from April worth up to £575 a year or £47.91 per month. The state pension is guaranteed to increase every year based on one of three metrics – inflation, wage growth or a flat 2.5%, and this is protected by law for both the new post-2016 state pension and the older, basic state pension.
The DWP has confirmed that the Triple Lock will result in an approximate £575 increase for new state pensioners from April. That’s because the key average earnings figure has been confirmed at 4.8%, which is higher than inflation and, of course, higher than the 2.5% minimum floor for increases.
New state pensioners are those who hit state pension age by April 2016. In April 2016, the state pension age was set at 66, which means that new state pensioners today are aged up to 76, though they could turn 77 just after April 6.
The new post-2016 state pensioners will get up to £47.91 extra per month, assuming they have a full National Insurance record.
Those with incomplete records will see lower total take-home for their pension payments, depending on how far off the full record they are, which the DWP calculates on a case-by-case basis when you first hit state pension age.
Older state pensioners will see their payments increase from £176.45 to £184.90, while new state pensioners will see theirs rise from the current £230.25 to £241.30 per week, for those with a full National Insurance record.
Crucially, both of these will still be below the £12,570 Personal Allowance threshold for income tax.
There is also another DWP rule which will allow older state pensioners to boost their weekly payments, depending on their income and savings.
Pension Credit is a benefit that older and new state pensioners can use to boost their income. For example, an older state pensioner who only qualifies for the basic state pension will get £184.90 per week. But Pension Credit tops up this amount up to £238 per week, which is only a few pounds less than the new state pension anyway (£241.30). However, your other income, such as work earnings, property income, savings interest or a private pension, is counted first, and you won’t be able to get the full amount if you have exceeded income limits.
However, the Chancellor has also announced that, in future, state pensioners who exceed the £12,570 Personal Tax Allowance will not owe tax on their state pension, provided they have no other income. Details of exactly how this will work are yet to be revealed.