What was once the ‘triple lock guarantee’, the measure by which state pension could be increased by the higher of changes in CPI, average earnings or 2.5%, has been trimmed down to a ‘double lock’. As already announced, due to concerns over the unprecedented volatility in wage rises, for 2022/23 state pension, pension credit and survivors’ benefit will only be measured against CPI and inflation.
This is amid concerns by the Government that such state benefits would have to be increased by 8% per annum, before wage inflation returns to normal levels.
Pension top-up for low earners
From 2024/25 individuals who earn below the income tax personal allowance and are part of a pension net pay arrangement will receive a 20% top up of to their pension savings.
Currently, anyone can make a payment of £2,880 into a registered pension scheme, and HMRC will increase it by 25%. Any low earners, on less than the personal allowance of £12,570, may put more into a pension but, currently, will not receive any further top up, as they pay no tax. However, this measure will result in greater contributions for those that are in work.