State Pension payments are important to millions of people, many of whom have left their time of hard work for a more relaxed time in retirement. It is likely that the state pension forms a major source of income for retired people, and thus obtaining as much money as possible is key to meeting later life goals as well as everyday costs. It is also essential for retired people to understand their entitlement, as many will be budgeting their lives around the amount they receive every four weeks.
State pension rises will take place in 2021, and the government has released the full details for pensioners to note.
The full rate for the new state pension, at present, stands at £175.20, which can be unlocked depending on a person’s National Insurance contributions.
However, this sum is set to rise in the 2021/22 financial year to a total of £179.60 per week.
A similar increase will also be observed for those who are claiming under old state pension rules.
The Triple Lock policy means the amount the government hands to pensioners is guaranteed to increase each year.
Current rules dictate this increase will occur based on the highest of three main components laid out within the policy.
These are: average earnings growth, the rate of inflation or 2.5 percent, which is decided ahead of time.
This financial year, the rise has been confirmed as one set at 2.5 percent for pensioners.
Work and Pensions Secretary Therese Coffey confirmed the increase would occur this year.
She said: “The Social Security Act 2020 enables me to increase the basic and new state pensions and the Standard Minimum Guarantee in Pension Credit by providing a discretion to increase them for one year even though there has been no growth in earnings.”
New rates are set to come into force on April 12, 2021 and will provide support to pensioners in the coming year.
Something which has also been confirmed is that state pension rules will not change now the UK has officially left the European Union with a deal.
There was concern about how pensioners living overseas could be affected by Brexit.
However, with a wide agreement reached, there has been consideration for expats who are pensioners.
From this month, the state pension will rise each year in the EU in line with the rates which are paid in the UK.
The state pension will be paid out to those living in the European Economic Area, EU countries or Switzerland, even if a person moved there after 2020.