Analysis of today's announcement of pension and benefit rates for April 2018 by mutual insurer Royal London shows that the poorest pensioners will get the smallest increase.
The rate of the state pension for new pensioners will rise by £4,80 from £159.55 to £164.35, an increase of 3%. By contrast, the rate of pension credit, the benefit for the poorest pensioners, will rise by just £3.65, from £159.35 to £163, an increase of just 2.3%. This is because the state pension is protected by the 'triple lock' policy whilst the legal requirement on pension credit is only to increase in line with the growth in average earnings. In many previous years, governments have found extra money within the benefits system to make sure the poorest pensioners got the same rise as their better off counterparts, but this year this has not been done.
Commenting, Royal London Director of Policy Steve Webb said:
"It is surprising that the government has decided to give the poorest pensioners the smallest increase. For those on pension credit, the rise is below the rate of inflation which will create a squeeze on the living standards of the poorest pensioners. By contrast, better off pensioners will get a full inflation-linked increase. For many years pensioner poverty has been falling and it would be worrying if that progress were to be reversed because of decisions like this."
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Notes to editors:
- The new rates of pensions and benefits announced today can be found here: https://www.gov.uk/government/publications/proposed-benefit-and-pension-rates-2018-to-2019
About Royal London:
Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.