Sunak should ‘step away’ from pension triple lock says Gauke
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Despite the financial ruin caused by the pandemic, experts have revealed millions of pensioners could be receiving less than they are entitled to currently. Helen Morrissey, senior pensions and retirement analysts at Hargreaves Lansdown claimed retirees could be in for a nasty shock over the reduced amount. Current rates show pensioners are entitled to £179.60 a week from April 2016 under the full flat-rate pension.
The full basic state pension pre-April 2016 is currently £137.60 a week.
Ms Morrissey said: “We often talk about State Pension in terms of the maximum amount of money you can receive but data shows there are still many who receive far less than this.
“The most recent figures from DWP show more than 2.1m pensioners are receiving less than £100 per week1 in State Pension, with women overall likely to receive less than men.
“If you have other sources of income in retirement, this many not be an issue, but for many people the State Pension is the backbone of their retirement planning and they could receive a nasty shock if they find they are entitled to less than they thought.
State pension: Two million earn less than £100 a week (Image: GETTY)
The state pension is set to rise by eight percent (Image: GETTY)
“Luckily there are ways people can boost the amount of State Pension they’re likely to receive.”
Under current rules, you may not be entitled to the full state pension if you have not accrued 35 years of national insurance contributions.
Under the previous state pension system (pre-April 2016) you could contract out of the additional state pension part of the state pension.
This meant you and your employer paid less in National Insurance contributions, so the amount of state pension you receive will be lower but in turn your workplace or personal pension was topped up.
State pension: Mr Sunak is set to make a decision on the triple lock (Image: GETTY)
This comes as the Chancellor faces a decision to scrap the triple lock on state pensions.
Under the triple lock, the state pension rises by the largest of 2.5 percent, the average growth in earnings or inflation.
Some economists have warned such a system is too expensive to maintain, especially due to the pandemic.
Following the return to work for millions of Britons across the country post the pandemic, average wages have increased rapidly.
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State pension: Mr Sunak is said to be in favour of scrapping the triple lock (Image: GETTY)
State pension: The ONS state a lower percentage increase would be adequate (Image: GETTY)
The Office for Budget Responsibility expects this average wage increase to rise by eight percent in the coming months.
This would, therefore, increase the state pension by eight percent in April 2022.
With the Government facing huge debt holes in its budget due to the pandemic, Mr Sunak is considering suspending the use of the triple lock.
Julian Jessop, an economics adviser to the Institute of Economic Affairs said: “The pay data have been distorted by the pandemic in ways that no one could have anticipated.
State pension: Best cities to retire to (Image: Express)
“Unless the triple lock is changed, this will provide an unintended windfall to pensioners that is increasingly hard to justify.”
Some forecasters have warned the Chancellor must adjust the increase to a more reasonable level.
The Office for National Statistics stated a rise between 3.5 to 4.9 percent would be more adequate.
State pension: Other experts have called on Mr Sunak to scrap the triple lock (Image: GETTY)
A Treasury spokesperson said it would confirm next year’s state pension rates in the autumn, adding: “We will continue to support retired people while ensuring future decisions are fair for both pensioners and taxpayers.”
Commenting on the potential scrap of the triple lock, Express.co.uk readers savaged Mr Sunak.
An Express reader said: “The UK pension is one of the lowest among western Europe. It needs increasing a lot more not decreasing.”