The government has made a series of changes to benefits such as Universal Credit, but the State Pension is also affected.
Last year the state pension age rose to 66 for men and women and further rises are planned.
The state pension age will be pushed up to 67 between 2026 and 2028.
It will be raised again to 68 between 2037 and 2039, seven years earlier than planned - reports Birmingham Live.
Work and Pensions Secretary David Gauke said the Government had to find a balance between funding the state pension and being fair on future generations of taxpayers.
He pointed out that increases in life expectancy mean those affected are still expected to receive more than previous generations.
The state pension is going up in April and increases in line with a triple lock policy.
Since 2011, the triple lock rules have meant that State Pension will rise by whichever of these three things is highest:
- 2.5 per cent
- earnings growth
- inflation rates
But the impact of coronavirus has created an imbalance. Because earnings and inflation have both fallen during the Covid pandemic, the highest of the three factors above is the 2.5 per cent increase option.
The existing rules would therefore mean a big increase of 2.5 per cent in the state pension in April 2021.
And then when wages bounce back as the economy recovers in 2022, that would be the highest of the three options and trigger an even heftier hike in state pensions in April that year.
New State Pension - 2020/2021 rates and 2021/2022 rates
Full rate - £175.20 increasing to £179.60
Transitional rate below full rate - 3.9146% increasing to 2.5114%
Protected payment - 1.70% decreasing to 0.50%
Increments – own (based on deferred new State Pension) 1.70% decreasing to 0.50%
Increments – inherited (based on deferred old State Pension) 1.70% decreasing to 0.50%
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Old State Pension - 2020/2021 rates and 2021/2022 rates
Category
Category A or B basic pension - £134.25 increasing to £137.60
Category B (lower) basic pension spouse or civil partner’s insurance - £80.45 increasing to £82.45
Category C or D non-contributory - £80.45 increasing to £82.45
Additional pension
Additional pension - 1.70% decreasing to 0.50%
Maximum additional pension (own and inherited) - £179.41 increasing to £180.31
Increments
Basic pension - 1.70% decreasing to 0.50%
Additional pension - 1.70% decreasing to 0.50%
Graduated Retirement Benefit - 1.70% decreasing to 0.50%
Inheritable lump sum - 1.70% decreasing to 0.50%
Contracted-out deduction
Contracted-out deduction from AP in respect of pre-April 1988 contracted-out earnings - Nil, remains unchanged
Contracted-out deduction from AP in respect of contracted-out earnings from April 1988 to 1997 -1.70% decreasing to 0.50%
Graduated Retirement Benefit
Graduated Retirement Benefit (unit) - 0.1440 increasing to 0.1447
Increase of long term incapacity for age
Increase of long term incapacity for age - 1.70% decreasing to 0.50%
Age 80 addition
Addition at age 80 - 0.25 staying unchanged
Increase of long term incapacity for age
Higher rate - £23.30 increasing to £23.40
Lower rate - £11.70 increasing to £11.75
Invalidity Allowance (transitional) for State Pension recipients
Higher rate - £23.30 increasing to £23.40
Middle rate -£14.90 increasing to £15.00
Lower rate - £97.45 increasing to £97.50
