The new financial year begins next week on April 6 and with that comes changes to the rates of benefit payments made by the Department for Work and Pensions (DWP). Claimants will see a 0.5 per cent increase in their allowances from the following week, beginning on April 12.
State Pension payments will rise by 2.5 per cent, which means people over the age of 66 on the full, new State Pension will receive £179.60 per week - an increase of £4.40 on the current rate of £175.20. This equates to an extra £17.60 a month and £228.80 for the 2021/22 financial year.
Anyone on the 'old' basic State Pension (category A or B), currently receiving £134.25 each week, will be paid £137.60 - a benefit increase of £3.35. This equates to an extra £13.40 a month and £174.20 for the 2021/22 financial year.
The annual rise is a result of the ‘triple lock’ ruling, which is a safeguard that currently ensures State Pension does not lose value because of inflation.
In recent months there have been calls to scrap or modify the triple lock in the wake of the coronavirus pandemic, amid fears that it could become too expensive to maintain.
The triple lock rules mean that the payment increases each year by whichever is the highest out of:
Earnings – the average percentage growth in wages (in the UK)
Prices – the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI)
2.5 per cent
Should a person have a protected payment, it increases each year in line with the CPI.
It is important to understand that not everyone will receive the new, full State Pension payment rate, and there may also be instances when a person can get higher amounts.
If you would like to see how much State Pension you will receive and when you can retire, you can use the UK Government’s online forecast tool.
It is also worth noting that where a person lives can also impact whether they receive the increased amount in April.
Provided they have paid enough UK National Insurance contributions to qualify, individuals can claim the State Pension while living abroad - however, payment amounts may be affected.
State Pension will only increase each year if they live in:
The European Economic Area (EEA)
Gibraltar
Switzerland
Countries that have a social security agreement with the UK (but one cannot get increases in Canada or New Zealand).
If a person lives outside these countries, they will not receive the annual payment rise. However, if that person returns to live in the UK, their pension rate will rise to the current rate.
Find out more about the new State Pension payment rates on the GOV.UK website here and about claiming while abroad here.
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