State Pensions will rise by 8.5% starting April 1st, 2024

Great news for retirees in the United Kingdom as thousands of pensioners who claim the full State Pension will receive up to £900 extra a year.

The government has announced that State Pensions will rise by 8.5% starting April 1st, 2024.

This is a much-needed boost to senior citizens who rely on the State Pensions to make ends meet. In this blog, we will discuss the significance of this announcement and what it means for the retired population of the UK.

Why are UK State Pensions going up?

The government has cited the triple lock policy as the reason for this rise. Under the triple lock policy, State Pensions increase every year by the highest of the following three measures:

• inflation
• average earnings growth
• or 2.5%.

Due to the economic impact of the COVID-19 pandemic, the average earnings growth has been distorted, resulting in an artificial increase in pensions. The government has decided to maintain the triple lock policy for the time being.

How much is the State Pension after April 8th?

Retirees who receive the full new State Pension will see their payments increase to £11,502.40 for the 2024-25 tax year, up from £10,600.20 in 2023-24.

This applies to those who reached the State Pension age after April 2016, with 35 qualifying years of National Insurance contributions.

Will the increase in State Pensions help alleviate the financial burden on older adults?

Many senior citizens in the UK struggle to make ends meet due to rising living costs and inadequate pension savings.

The State Pension is a lifeline for these individuals, providing them with a regular income that they can use to pay for essentials such as food, housing, and social care.

With increased pensions, retired citizens will have more money to spend on leisure activities, helping their families or services like home care.

Is the State Pension amount enough?

However, it is worth noting that the rise in State Pensions and benefits such as Attendance Allowance may not be enough to address the long-term financial challenges faced by retirees.

The cost of living is rising faster than the rate of inflation, which means that the purchasing power of pensions is declining over time.

Additionally, the increase in pensions may not be enough to cover the rising costs of social care which is a significant expense for many retired citizens.

Will the State Pension increase affect how much tax I pay?

Potentially yes. The State Pension is taxable income, unfortunately.

The amount of income most people can have without paying income tax (personal allowance) – will remain at its current level of £12,570 and will stay the same up to and including the 2027/28 tax year.

If you receive the new State Pension and have no other taxable income, you might have to start paying taxes from 2026/27.

Women Against Pension Inequality

The State Pension is arguably difficult for older adults to live on, regardless of gender.

We covered a story recently on the significant gap between pension savings for men and women, citing that men, on average, save £205,000 for their retirement but typically have a shorter life expectancy of 79.

In contrast, women save just £69,000 yet on average, live to 83.

The figures are disheartening, suggesting that a girl would need to start saving for a pension at just three years old to afford the same retirement as a man.

On top of this, is the fact that many women who were due to receive their pension were suddenly told that they had to wait an additional six years as the pension age was increased from 60 to 65 for women.

These State Pension age changes had a significant financial impact on thousands of British women, many of whom have joined “WASPI” (Women Against State Pension Inequality).

Of course, many retirees can only dream of having savings and must solely rely on the State Pension, highlighting the importance of continually reviewing the State Pension age and amount.

A State Pension increase is welcome but more is needed

In conclusion, the increase in State Pensions is a welcome development for retired citizens in the UK but arguably, a lot more needs to be done to ensure that senior citizens are supported and can live with dignity, security and proper care in their later years.

Free advice on care

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