Older Pensioners Set to Lose Thousands in State Pension Disparity
Chancellor Rachel Reeves is set to announce a significant increase to the state pension tomorrow, but a stark divide will leave thousands of older retirees significantly worse off. The full new state pension will rise to just over £240 a week from next April, while those on the older, basic state pension will receive a much smaller boost, creating a financial gap of nearly £3,000 per year.
The Two-Tier Pension Uprating Explained
The core of the issue lies in the different rates applied to the two pension schemes. The full new state pension, for those who reached state pension age after April 2016, is currently £230.25 a week. A 4.7 per cent increase, in line with earnings growth, will take this to approximately £241.05 a week. This represents an annual income of around £12,534, an extra £561 per year.
However, retirees on the basic state pension—typically men born before 1951 and women born before 1953—will see their payments increase from £176.45 a week to only £184.90 a week. This results in an annual payment of £9,614, which is a staggering £2,920 less than their younger counterparts will receive.
Criticism and Wider Political Context
This disparity has been labelled a "two-tier system" by critics, including former Department for Work and Pensions (DWP) employee Sandra Wrench. She has previously warned that the triple lock policy only applies to the basic rates, cementing the financial disadvantage for those who retired before the 2016 changes.
While Chancellor Reeves stated her commitment to "supporting pensioners to give them the security in retirement they deserve," the figures reveal a clear inequality. The announcement will form part of the Budget, where the government will also outline plans for the NHS and the cost of living.
In a separate pre-Budget development, Kemi Badenoch is expected to criticise the government's new Employment Rights Bill. She will argue that making it harder for businesses to sack staff or reduce hours will discourage seasonal hiring, such as for Christmas jobs, ultimately harming both employers and employees.
