The State Pension is expected to go up 2.5% from April 2014 under the government’s ‘triple lock’ rule.
The index link for the State Pension is based on the annual rate of inflation in September each year.
The figure is expected to be 2.4%, but under the triple lock terms, the government will pay a minimum 2.5%.
The triple lock works by offering the highest rate from the Consumer Prices Index, wage inflation or a minimum 2.5%.
If the 2.5% rise is agreed, the State Pension will rise from £110 a week by £2.75 to £112.75.
No increase for frozen expats
Expats with frozen pensions will not receive the increase.
Analysts and economists predict the CPI will fall below 2.4% from August’s 2.7% and that the rate could drop to the Bank of England target of around 2% early in 2014.
Meanwhile, the unions are warning that millions of workers will lose out when the government introduces a single tier pension of £144 a week in 2016.
The TUC claims 20 million workers contracted into the state second pension will get less money when they retire because of the switch which will do away with the second-tier system.
Trade Union Congress (TUC) general secretary Frances O’Grady said: “The second state pension aims to top up the basic state pension for low and middle income earners.
“Taking away the support means many workers in the private sector could receive thousands of pounds less in retirement.
Axing second state pension
“While we support the single tier pension, £144 a week is far too low a payment and could make many pensioners worse off.”
A TUC study explains low earners and carers will only gain from the change to the single tier system first come in, but over time incomes will fall.
As an example, the TUC says a worker earning an average £26,000 a year for 35 years will lose money as soon as the new pension starts. Someone retiring in 2030, for example, will lose £29 a week, or £1,508 a year compared with the current two-tier system.
The unions suggest the government wants private pensions to fill any void left by axing the second state pension, while auto enrolment into workplace pensions takes the lead.
“The way forward as we see it is to raise the £144 a week rate higher and to also increase the minimum contributions for auto reenrolment. A combination of both should make up for the loss of the second tier pension,” said O’Grady.
You would think that the unions would be supporting the campaign to stop the freezing as this affects some of their members but having written to them I don’t think they take it seriously. They would if they were receiving a frozen pension.The leaders are on their own gravy train and don’t give a tinkers cuss.