Silver lining for some amid financial crisis as state pension set to top £200

Millions of pensioners are on track for a record raise of nearly £1,000 a year, with the state pension topping £200 a week.

Inflation is at its highest rate in decades and consumer prices rose 10.1% for the first time in 40 years.

And prices are set to soar again next month – with the Office for National Statistics (ONS) predicting another jump to 13%.

While the numbers are bad news for working families, the ‘triple lockdown’ of the state pension should shield older households from the worst of the pain.

Under the triple lockdown, the state pension must increase each April by the higher of these three measures: inflation, wage growth or 2.5%. However, it could cost taxpayers billions of pounds, experts warned last night.

Investment platform AJ Bell estimates the ‘triple lockdown’ could cost taxpayers £24billion over the next two years.

Tom Selby of AJ Bell said: “This will inevitably fuel a debate about intergenerational equity, with retirees having their real incomes protected while younger workers struggle.”

If prices rise in line with the ONS forecast, the new state pension will rise from £18.70 to £203.85 a week, or £972.40 a year. People on a basic state pension will see an increase of £14.35 a week, or £746.20 a year.

Andrew Tully, Chief Technical Officer of Canada Life, said: “As workers continue to feel the pain as wages lag behind inflation, there will be positive news in the months ahead for retirees. The state pension is highly likely to be on track to increase by a record amount in April 2023.’

The triple lockdown was suspended this year following unusually high post-pandemic wage growth of 8.1%.

Instead, state pension incomes rose by 3.1%, leaving older people £13,000 poorer on average.