Rachel Reeves could make a huge change to pensions this week.
If you receive the state pension, you could be in for a huge £561 boost on Wednesday, but there’s one thing you need to be aware of. From April next year, the state pension is set to increase due to the triple lock.
This rise, based on 4.7% earnings growth, will bring the full new state pension to £12,534 per year, an increase of £561, reports The Independent. The catch is that recipients will be close to the frozen personal allowance of £12,570, which could lead to more pensioners paying income tax on additional income.
Your pension could undergo a change this week (Image: Getty Images)
Rachel Reeves, the Chancellor, has confirmed the Government’s commitment to the triple lock. The Government says this aims to provide security for pensioners.
The closeness of the state pension to the personal allowance creates a significant political and economic challenge for the Government. Currently, the allowance is frozen until 2028. At the moment, increases to the state pension are decided by either inflation, wage growth or 2.5%, but it depends on which of these is highest.
This is because pensioners’ income could leave them struggling as living costs continue to rise. With an ageing population, meaning people are living longer, the pension bill is quickly rising.
Rachel Reeves will set out the budget on November 26 (Image: Getty Images)
This could create a huge problem for both pensioners and the Government, meaning change is likely to come in the future.
Rachel Reeves has announced it will increase, above the rate of inflation for this year which is currently at 3.6%.
She said: “Whether it’s our commitment to the triple lock or to rebuilding our NHS to cut waiting lists, we’re supporting pensioners to give them the security in retirement they deserve.
“At the Budget this week, I will set out how we will take the fair choices to deliver on the country’s priorities to cut NHS waiting lists, cut national debt and cut the cost of living.”
The Chancellor will set out the Budget on November 26.
