The State Pension normally increases in line with the triple lock. That means it rises by whichever’s highest of wage growth, inflation (CPI), or 2.5% each year.
On 17 November 2022, Chancellor Jeremy Hunt confirmed plans to increase the State Pension in line with inflation. This means pensioners are in line for a 10.1% increase – the biggest ever increase in the State Pension.
This has come as a huge relief for pensioners, who’ve been banking on an inflation-linked increase after their budgets have come under pressure in recent months.
What’s next for inflation in 2023?
This article isn’t personal advice. If you’re not sure what’s right for your circumstances, ask for financial advice. Pension and tax rules can change, and benefits depend on individual circumstances.
How much can I currently get and when?
The State Pension isn’t the same for everyone, and understanding how much you could claim, and when, can be confusing.
The amount you’ll get depends on whether you qualify for the basic State Pension or new State Pension and how many ‘qualifying years’ of National Insurance (NI) contributions you have. It will also depend on whether or not you contracted out of the additional State Pension.
To check how much you’re on track to receive, ask for a State Pension statement.
Will the State Pension age rise?
The State Pension age is the earliest age you can start receiving your State Pension. This will be different for everyone as it’s worked out based on your date of birth.
Currently the State Pension age is 66 and it’s due to rise to 68 by 2046. But recent reports suggest the government wants to introduce this rise potentially as early as 2034. This rise could affect people aged 54 or younger today.
Despite these headlines, nothing has yet been announced or confirmed. We don’t know if these changes will take place, but the government must publish any changes to the State Pension age by 7 May 2023.
You can use the government’s State Pension calculator to find out the earliest age you can claim payments under the current legislation.
How much will the State Pension pay from April 2023?
Inflation reached 10.1% in September 2022, meaning State Pension income will rise by this amount from April 2023.
The full new State Pension will rise from £185.15 per week to £203.85. That means you’d get an extra £972.
For anyone entitled to the full basic State Pension, their weekly payments are set to increase from £141.85 to £156.20 from April.
How to increase your State Pension income
Delay claiming your State Pension
You could think about delaying your State Penson payments if you don’t need the income immediately. For example, if you’re planning to work past State Pension age.
If you do, the government will increase the amount you receive for every year you delay taking an income.
MORE ON DELAYING THE STATE PENSION
Make voluntary National Insurance contributions
You could consider filling any gaps in your NI record, if eligible. You need a minimum of 35 years of NI contributions to be eligible for the full new State Pension income. By choosing to make voluntary NI contributions, this could increase the amount of income you get.
Pension credits
The chancellor confirmed that pension credit would also be uprated by 10.1% in April 2023. This means anyone over State Pension age, and whose earnings are less than £201 (£307 for a couple) a week, could be eligible for pension credit.
This is an income-related benefit, on which you won’t have to pay tax. The amount of pension credit you’ll get depends on your personal circumstances.
To find out if you’re eligible, and by how much, you can use the government’s calculator.
Can you live off the State Pension alone?
For most people, it’s unlikely the State Pension will be enough to live off on its own.
Even with the new State Pension increase to £10,600 effective from April 2023, you’d still fall short by around £2,200 to reach the ‘minimum’ living standard for a single person suggested by industry experts. This difference increases to £26,700 for a single person looking to achieve a ‘comfortable’ living standard.
The reinstatement of the pension triple lock after its suspension last year shows that the government can change the rules at any time. This highlights the importance of saving into a workplace or private pension, alongside anything the state offers.
Realistically your retirement could last 30 years or even longer, so you need to make sure you’ll have enough money to last as long as your retirement.
Our pension calculator can help you work out how much your current pensions are on track to pay you in retirement. And if you’re not on track, we offer some tips to help you reach your income goals.
Our planning tools can help you work out how much more you might need your private pension to pay, and how you can make up for any differences. Once you put money into a pension, you can’t usually access it until age 55 (rising to 57 from 2028).
What other help is available?
What you do with your pension is an important decision. It’s important to understand your options and check the option you pick is right for your circumstances. Take advice or seek guidance if you’re unsure.
The government provides a free and impartial service to help you understand your retirement options – more on Pension Wise.