The June inflation rate for this year was higher than anticipated at 7.9 per cent, which suggests that the state pension for retirees may get a large increase in the upcoming year.
According to Broadstone, rising price pressures will cause the triple lock mechanism to cause another significant increase.
The year-to-September Consumer Price Index (CPI) data will be used to determine the State Pension rise for 2024–25 for the following year. The projected effects of various CPI values on the State Pension are shown below.
In the current fiscal year, it is predicted that the UK, excluding Northern Ireland, will spend £124bn on state pensions, according to a recent report by the OBR. The report also warned that state pension spending is anticipated to increase by £23bn in 2027–28 compared to the start of the decade, 0.8 per cent of GDP in today’s figures.
Broadstone director David Pye says: “After benefitting from around a £1,000 increase to the State Pension this year, retirees look set for another multi-hundred-pound boost as high inflation persists.
“It looks likely that the state pension will rise above £11,000 next year which will further embed its importance as the foundation of pensioners’ income. At this current rate of increase, it won’t be long before retirees start tripping over the £12,500 income tax threshold solely based on the State Pension.
“However, with government finances under pressure, the soaring cost of the state pension triple-lock will raise further questions around its long-term viability. A demographic bomb is soon to hit with a significant number of baby boomers approaching retirement which will ratchet up the State Pension’s cost to the taxpayer’s public purse.”
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