By Deirdre Tynan • 08 September 2021 • 9:34
Following unprecedented fluctuations to earnings caused by the Covid-19 pandemic, the government has announced legislation to set aside for one year the use of average earnings growth figures for State Pensions up-rating.
“In taking this decision, the government has carefully considered the fairest approach for both pensioners and younger taxpayers,” the government said on September 7.
The legislation will ensure pensioner incomes still receive a significant boost, uprating by the higher of inflation or 2.5 per cent.
The growth in earnings is estimated to be between 8 per cent and 8.5 per cent. This would mean a difference of around £4 or 5 billion in basic and new State Pensions expenditure in 2022/23, when comparing with the higher of 2.5 per cent or expected price inflation.
“Younger people have been hit hardest by the financial impacts of the pandemic, and the artificial inflation of pensioner incomes at this time would be out of kilter with the pressures being experienced by the rest of the population.
“This makes sure pensioners’ spending power is preserved and they’re protected from higher costs of living.
“But will also ensure that as we are having to make difficult decisions elsewhere across public spending – including freezing public sector pay – pensioners are not unfairly benefitting from a statistical anomaly,” the government added.
The new legislation is a one-year response to exceptional circumstances and the government plans to return the earnings element of the Triple Lock next year.
Since 2010, the full yearly basic State Pension has increased by over £2,050 in cash terms.
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Deirdre Tynan is an award-winning journalist who enjoys bringing the best in news reporting to Spain’s largest English-language newspaper, Euro Weekly News. She has previously worked at The Mirror, Ireland on Sunday and for news agencies, media outlets and international organisations in America, Europe and Asia. A huge fan of British politics and newspapers, Deirdre is equally fascinated by the political scene in Madrid and Sevilla. She moved to Spain in 2018 and is based in Jaen.
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