Retirees to lose out on up to £2,400 despite state pension rising to £10,340

Chancellor Rishi Sunak has said people can expect an up to 7% rise next year as a triple lock is to be reinstated.

The chancellor said the rise in April 2023 will be in line with September's inflation rate this year. The Bank of England expects this to come in at 7.4%

The triple lock formula means the state pension must rise by the highest out of average earnings growth, 2.5% and inflation but as this year's earnings were skewed by the pandemic, it was put on hold. If not, pensioners would've seen a rise of 8% but instead will only see a 3.1% growth come 11 April.

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The Chancellor told the Commons Treasury Committee: "The triple lock will function as it normally functions." If inflation does hit 7.4 per cent in September, it will jump to £198.85 a week. This would increase the annual payment from £9,627.80 to £10,340 a year, the biggest single increase ever. However, not everyone will benefit from this.

Only those who retire after 6 April 2016 will benefit from the rise, meaning men born before April 6, 1951, and women born before 6 April 1953. If it is raised by 7.4 per cent in 2023, that would mean a £152.35 a week, which works out as £7,922 a year.

That means those who have or will retire before April 2026 stand to lose out on £2,418. MP Harriett Baldwin asked the Chancellor: "For pensioners this year, you're guaranteeing the triple lock again?" Mr Sunak replied: "Yes." Asked what the Treasury was budgeting for the pension rise, he added: "It will be whatever the estimated Consumer Price Index is in September - seven-ish per cent."

The Chancellor has also defended his spring statement after widespread criticism over the matter of the cost of living crisis. He said: "We are already forecast to borrow in this coming year about 60 per cent, more as a percentage of GDP than our post-war average, 20 per cent more as a percentage of GDP than we were forecast to borrow in October, so it is already a significant amount of borrowing. My view is an excessive amount of borrowing now is not the responsible thing to do."

Mr Sunak added: "If someone's view is Government can or should make everybody whole for inflation - particularly inflation at these levels caused by global supply factors - then that's something that I don't think is do-able."