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How much the State Pension will pay in 2023/24

How much the State Pension will pay in 2023/24

Those receiving the UK State Pension are set for a big pay rise this April. Read on to see how the New and Basic State Pensions work and how much they'll be worth in 2023.

lovemoney staff

Investing and pensions

lovemoney staff
Updated on 2 January 2023

The UK State Pension is set to increase by an astonishing 10.1% from April, it has been confirmed. 

It means hard-pressed pensioners could enjoy an annual State Pension pay rise of close to £1,000 during the 2023/24 tax year.

However, exactly how much pension you receive will vary based on a number of factors. 

The rest of this article looks in more detail at how the State Pension increases are calculated and how much you can expect to receive.

But first, if you're retired and struggling to make ends meet, make sure you are receiving all these vital credits and benefits that you are entitled to.

If you still need help bringing in extra cash after you've finished working, take a look at this guide to boosting income in retirement.

How the 2023/24 State Pension rise was calculated

The rate at which the following year's State Pension will increase is currently calculated using what's known as the triple lock system.

In short, this means looking at the three figures of annual wage growth to July, inflation as determined by the Consumer Price Index in September (released in October), and 2.5%.

Whichever is the highest is the one that'll determine the following year's State Pension rise.

In 2022, CPI inflation was by far the highest at 10.1%, so this is the figure that will be applied to the 2023/2024 State Pension.

Could the State Pension triple lock be scrapped before April 2023?

The State Pension triple lock has long proved a controversial financial matter for politicians.

While it does ensure retirees receive a worthwhile increase in real terms every year, it's also extremely expensive to keep in place.

After a brief flirtation with loosening the Government purse strings in the now-infamous 'mini Budget', the resultant fallout has seen austerity brought back into sharp focus - as witnessed by this week's financial statement from the latest chancellor, Jeremy Hunt.    

So what might that mean for the State Pension triple lock? Earlier this week, Liz Truss confirmed that it would be protected, and that is the official position as things stand. 

However, she has obviously since stepped down as Prime Minister, and it remains to be seen who the new leader will be. 

If the new PM adopts a more austere approach, it's not impossible that the costly triple lock will be back in the crosshairs.

To reiterate, as things stand the triple lock is confirmed, we just wanted to highlight the potential for change. Very little is certain in such volatile times.

Assuming it does go ahead, let's take a look at how much retirees will get in pounds and pence.

Which State Pension are you eligible for?

As a result of our convoluted and, some would say, unfair welfare system, there are two different State Pensions.

There's the old Basic State Pension and the New State Pension, which pay two significantly different amounts.

The old pension is given to anyone who retired before April 2016 and is worth notably less than those who retire on the new State Pension.

How much the New State Pension will pay in 2023/24

The New State Pension currently pays £185.15 a week and will do so for the remainder of the 2022/23 tax year.

An increase of 10.1% from next April would see the New State Pension jump to almost £204 a week, or £10,600 a year. 

How much the old Basic State Pension pays in 2022/23

The weekly Basic State pension currently pays £141.86 and will do so for the remainder of the 2022/23 tax year. 

From April 2023, this will rise to around £156 a week, or £8,133 a year.

Past State Pension changes

Here’s how the State Pension has increased over the last few years.

 

How State Pension has risen in previous years

April 2017

2.5%

April 2018

3%

April 2019

2.6%

April 2020

3.9%

April 2021

2.5%

April 2022

3.1%

Boosting your pension income

If you're struggling to make ends meet in retirement, it's vital you ensure you're getting all the help you're entitled to from the Government.

Sadly, it's pensioners on low incomes who are most likely to miss out in this regard, so we've put together this checklist of vital credits and benefits people can get in retirement.

If you've gone through the list and are still struggling financially, take a look at this guide to boosting your income in retirement and this piece on clearing debt

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