The Department for Work and Pensions (DWP) is preventing around 450,000 state pensioners from receiving the £575 Triple Lock increase scheduled for April. Three specific groups are most likely to be denied this uplift.
Who Is Affected?
The Triple Lock, which guarantees that the state pension rises by the highest of average earnings growth, inflation, or 2.5%, will not apply to everyone. The three groups at risk are:
- Retirees living overseas in countries without a social security agreement with the UK
- Those who have not built up enough qualifying National Insurance years
- Retirees who were 'contracted out' of the additional state pension before 6 April 2016
Retirees Abroad Face Frozen Pensions
Approximately 453,000 retirees living abroad will miss out on the Triple Lock increase because their state pension rates are frozen at the level they were when they emigrated. This applies to those living in countries outside the European Economic Area (EEA), Gibraltar, or Switzerland, and those without a bilateral social security agreement with the UK.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, explained: 'If you retire somewhere that is not in the European Economic Area (EEA), Gibraltar, Switzerland or a country that doesn't have a social security agreement with the UK then your state pension will be frozen.' This means British citizens retiring in places like New Zealand, Australia, and Canada do not benefit from annual increases. 'Over time this freeze can have a major impact on your standard of living,' she added.
Insufficient National Insurance Contributions
Another group at risk includes those without the required National Insurance contributions. Jemma Slingo, pensions and investment specialist at Fidelity International, noted: 'While [the triple lock] will boost basic payments, the additional state pension – which is an extra top-up based on your National Insurance contributions – will simply rise in line with inflation.'
Contracted Out Before 2016
If you were contracted out before 6 April 2016, you may not receive the full new State Pension of £241.30 per week. An amount is deducted from your new State Pension if you were contracted out. Clare Moffat, pension and tax expert at Royal London, added: 'If you choose not to take your state pension when you're entitled to, but delay, the part you defer also only rises by the Consumer Price Index [measure of inflation].'
