MILLIONS of people are set to see a bumper increase in their state pension payments next year due to soaring prices.
Inflation has now hit double figures at 10.1% in the 12 months to July, new figures released today show.
Pensioners are set to benefit from rising inflation after the government confirmed the triple state pension lock would return next year.
The triple lock means that payments increase each year by the higher of three figures: inflation, wages or 2.5%.
With inflation soaring, that figure is expected to drive next year’s hike, which takes effect from April.
The new maximum state pension is now £185.15 and could rise to around £203.70 a week in 2023.
That is if inflation stays at the current rate of 10.1%. This would increase state pension payments by an additional £18.70 a week – or £962.10 a year.
Conservative leadership candidate Liz Truss said of the triple pension lock: “I’m not going to fudge the numbers, I’m fully committed to the triple lock, which gives the highest rate.”
The calculation of the triple blocking for the annual increase in the old-age benefit has been temporarily suspended due to the pandemic and has been reduced to a double blocking.
Wage growth was removed from the increase because the coronavirus skewed wage data that would have given retirees a bumper payday.
Instead, state pension rates rose 3.1% in April, based on inflation figures from last year.
But with inflation currently much higher at 10.1% and a rise not likely to occur until next year, many retirees are likely to feel worse in the interim.
Prices have soared, including food, fuel and energy costs – and the Bank of England predicts inflation could even hit 13% this year.
If this figure reaches 13%, it would increase by £24.07 per week, or £1,255 per year.
An increase would also increase the amounts of pension credits for the most disadvantaged retirees.
The hike will be based on the rate of inflation in September this year, and it could still be higher or lower then.
Those living on the state pension face a difficult wait until the benefit “catch up” to current inflation rates.
The energy price cap rose by 54% in April, adding hundreds of pounds to bills and is expected to reach £5,300 a year this winter, experts have warned.
The government has previously announced a support package that will see pensioners receive one-off payments worth hundreds of pounds by the time state pensions rise next year.
Millions of pensioners will receive a £300 payment in October to help defray the rising cost of heating homes over the winter.
Pensioners on the lowest incomes will receive a £650 payment along with others on benefits like Universal Credit from July.
And people with disabilities could be eligible for a £150 payment.
Anyone struggling with higher bills or worried about their debts can get help.
There are many organizations where you can seek advice for free, including: