The state pension is set to rise just £ 4.40 in the week next year, the smallest increase allowed by legislation.
The increase means that the “new” base pension will increase from £ 175.20 to £ 179.60 a week – which is £ 228.80 a year.
The “old” state pension will rise by £ 3.40 a week from £ 134.25 to £ 137.65.
The rally – which is 2.5% – will be confirmed later by the government, but is uncertain after the September inflation figures came in at just 0.5%.
Under current rules, pensions rise every year at the highest rates or earnings, or 2.5%.
With earnings falling due to the coronavirus and prices rising only 0.5%, this means that the 2.5% figure will be used to determine pensions in 2021.
Tom Selby, senior analyst at AJ Bell, said: With wages falling due to Covid-19 and pushing inflation close to 0%, the triple-lock value of government pensions has never been clearer.
(Photo: Universal Images Group Editorial)
“If not for this policy, retirees would likely have seen their government pensions frozen next year.
“As it stands, retirees are set to benefit from a 2.5% government pension increase in 2021/22, by adding £ 3.40 per week to the“ old ”basic pension and £ 4.40 a week to the“ new ”state pension has been entered In April 2016.
“This will be the fourth time that the triple lock pillar of 2.5% has been activated since the policy was introduced in 2011/2012, which means that the value of the state’s pension will increase in real terms against the average wages of workers and the price of goods and services.”
September inflation numbers – which are often used to determine government pension increases – are affected by the withdrawal of the Eat Out to Help Out program.
“The official end of the Eat Out to Help Out plan means higher prices for eating out during the month of September, partly offsetting the steep drop in inflation in August,” said Jonathan Atho, deputy national statistician at the Office for National Statistics.
“Airline ticket prices usually drop dramatically at this time due to the end of the school holiday but with the prices dropping this year, as fewer people travel abroad, the lower prices were less significant.
Meanwhile, while some consumers are looking for alternatives to using public transportation, there has been an increasing demand for used cars, which has pushed up their prices.
