State pension expected to increase by 8% next year – how much extra could you get?

RETIRED people are set to get a bumper state pension increase next year, according to the latest forecasts.

The Office for Budget Responsibility said state pensions could jump as much as 8% in 2022 – a record increase.

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The state pension rises every year either by the rate of inflation or average wage growth – whichever is highest.

This is called the triple lock, and will see pension payments soar 8% next year, in line with the rise in wage growth in the three months to July.

Wages have soared because earnings were low in lockdown, but have jumped as the economy has reopened.

“If earnings growth in the three months to July period that determines triple lock uprating for next April was 8%, as some expect, that would add around £3 billion a year to spending,” the OBR fiscal risks report said.

Chancellor Rishi Sunak is likely to face pressure to suspend the rise, given the unusually high spike.

However, the government has ruled out scrapping the triple lock altogether.

What is the state pension?

For the 2021-22 tax year, the new full state pension is set at £179.60 a week. 

This is what the state pays those who reach state pension age after April 6, 2016.

The basic state pension – for older retirees – is set at £137.60 per week.

Check on gov.uk’s website to see what your state pension age is.

How much you actually get depends how much you’ve paid in national insurance contributions throughout your working life.

If you have made at least 35 years of qualifying national insurance contributions, you may qualify for the maximum amount. 

To get any state pension at all, you will need at least 10 years on your national insurance record. 

If you have gaps in your contributions, due to childcare responsibilities for example, you might be able to apply for pension credits to top up your retirement fund.

How much extra you could get

If the state pension rises 8%, then the weekly maximum payment amount will jump to £194 from next April.

The basic state pension would increase to £149.15.

However, the amount pensioners actually receive is dependant on their national insurance contributions.

In total, the triple lock will cost the public purse an extra £3bn a year, the OBR said.

This retail worker shared how he became a pension millionaire with more than £1million saved.

Pubs in England are already fully booked for Euros final on Sunday ahead of Denmark semi-final showdown tonight.

Wetherspoons is planning to hike food prices across all pubs when lockdown measures end.

This post first appeared on thesun.co.uk