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State Pension to increase by 2.7% next year following inflation figures

Simon Ward
by Lovemoney Staff Simon Ward on 15 October 2013  |  Comments 4 comments

September's annual CPI inflation figure, which influences the following year's increases for the Basic State Pension and other benefits, has been announced.

State Pension to increase by 2.7% next year following inflation figures

Certain benefits, including the Basic State Pension, will increase by 2.7% from April, following the publication of September’s inflation figures by the Office for National Statistics (ONS). These inflation figures are used to increase or ‘uprate’ the benefits so they keep pace with the cost of living.

The Consumer Prices Index (CPI) measurement of annual inflation stayed flat from August to September at 2.7%, the ONS said. Airfares rose, but this was offset by a fall in petrol and diesel prices.

The following benefits continue to be uprated in line with the CPI:

  • Basic State Pension
  • Personal Independence Payment (formerly Disability Living Allowance);
  • Attendance Allowance;
  • Carers Allowance;
  • Working-age benefit additions (premiums) for pensioners and disabled people;
  • The Support Group component of Employment and Support Allowance;
  • Disability elements of Tax Credits.

The remaining working-age benefits will only be increased by 1% for the next three years following Government policy introduced earlier this year.

Initial estimates based on the inflation figures say that the maximum Basic State Pension for an individual will increase from £110.15 to £113.10. The uprating of the Basic State Pension is protected by a so-called 'triple lock', which means it will always rise by the higher of: average earnings; the September annual increase in CPI; or 2.5%. In this case, it will be the 2.7% CPI figure.

The CPI figure is also used for uprating public sector pensions.

The Government moved from using the Retail Prices Index (RPI) measure of inflation for uprating most benefits to CPI in 2011. CPI is generally lower.

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Other increases using CPI

Meanwhile, annual ISA limits are set to increase to £11,760 from £11,520 and for Junior ISAs to £3,840 from £3,720. As of last year, ISA increases are also now calculated using CPI inflation figures rather than RPI.

The final increases will be confirmed by the Treasury later in the year.

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Comments (4)

  • lipgate5
    Love rating 0
    lipgate5 said

    As usual the figures ignore tax - the energy companies are raising prices by between 8% and 11% and virtually immediately - whereas the pension increase will not take place until April next year and is subject to the dreaded Income Tax.

    For a large number of pensioners the 2.7% is therefore to be reduced to 2.0% due to the greedy 20% tax grab.

    Report on 28 October 2013  |  Love thisLove  0 loves
  • Alfren
    Love rating 0
    Alfren said

    Folks look at it from the government's point of view. Which group is easier to control and brow beat? Yes! you guessed right, the pensioner. Why? because we are at the mercy of all the fat greedy utilities, that hold the sway of power over our politicians. Successive governments have done nothing to control the rich and powerful, why? because they know that their funding and financial support would dry up. So to look good they con the working man and woman by holding expensive inquiries, knowing full well that nothing will be done at the end of such an exercise. Another con applied to pensioners and the meagre pension. The freezing of the personal allowance. If you are a pensioner in receipt of just the state pension you are quids in, but if you are one of the many that saved through a private pension, then you are liable for tax. Hence the government hands out £3 a week increase in the weekly pension, but claws it back through income tax, not to mention all the other types of taxes and stealth taxes that are levied.

    How strange that the government introduces straight away any half baked idea from Brussels that is detrimental to the British people, yet they are slow to introduce the same level of pension that is enjoyed by pensioners in Europe. Talk about having your cake and eating it.

    How about this for having a laugh, the government have introduced the bedroom tax stating that they cannot afford to fund this benefit. Yet they are damn quick to increase the foreign aid budget and join in expensive wars at the drop of a hat. I wonder where the money is coming from, oh! I forget from us the cash cows A.K.A. the taxpayers. Charity begins at home and it is about time that our elected representives put the needs of Britain first and everything else second.

    Report on 02 November 2013  |  Love thisLove  0 loves

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