Bumper State Pension Boost On The Way For Expats

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Expats lucky enough to have their state pension boosted by the UK government each year can expect a 4% rise – but thousands will miss out on the increase.

The increase will give anyone on the full new state pension an extra £6.75 a week to spend, taking the payment from £168.60 to £175.35.

Taking the figures over a year, the hike will make expats £351 better off.

For expats who started collecting the state pension before April 6, 2016, the old state pension will  go up from £129.20 to £134.45 a week – a rise of £267 a year.

The figures still need government confirmation under the triple lock agreement.

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The triple lock sets the annual cost of living uprating for the state pension at the highest of 2.5%, the annual cost of living inflation rate or the increase in average wages.

The earnings figure used for the calculation comes from July – which was returned 4% growth.

How the triple lock impacts state pensions

Inflation is likely to be around 1.7%, which was the August figure, although the September rate is the one used for the triple lock. This won’t be announced until later this month but is expected to be lower than 2.5%.

Steven Cameron, pensions director at financial firm Aegon said: “Based on the latest earnings growth figures, it looks like state pensioners can look forward to an inflation busting 4% increase in their state pension from next April.

“This will be welcome news for current state pensioners. However, these inflation busting increases do come at a significant cost.

“The state pension is not funded in advance so pensions are funded on a ‘pay as you go’ basis from today’s workers’ National Insurance contributions.

“With the prospect of an early general election, it will be interesting to see where each party stands on commitments to retaining the triple lock for the next five years.”

Where the state pension is frozen

The state pension has grown by 32% since 2010, while prices have increased by 24% and earnings by 20%.

The triple lock is guaranteed until 2022.

Office for Budget Responsibility data shows that without the triple lock the state pension bill will increase by £21 billion over the next 40 years, but with it the cost will soar by £35 billion.

Expats in a select list of countries with a reciprocal social security agreement with the UK will see their pensions uprated by the 4% from April 6, 2020.

The state pension is frozen at the rate of the first payment for expats in any other country.

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1 COMMENT

  1. If Lisa Smith had done her homework she would have determined that the National Insurance Fund (NIF) which is used for National Insurance Contributions and to pay the State Pension will have an excess of £41 billion by 2023/24, according to the Government Actuary’s Department, without any increases to taxation or National Insurance, and without compromising on social services.

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