State pension 2020: ‘Good news in difficult climate’ as pensioners to get ‘bumper’ rise
The state pension rises each year, with the increases taking place under the triple lock mechanism. This means that both the basic and new state pension increases by whichever is the highest out of the average percentage growth in wages in Great Britain, the percentage in prices in the UK as measured by the Consumer Prices Index (CPI), and 2.5 percent.
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This year, the increase is tied to earnings growth, with the triple lock delivering a 3.9 percent rise to the new state pension and basic state pension.
The new rates will come into effect from Monday, on April 6, 2020.
The increase is more than double that of inflation-linked benefits and tax credits – such as Child Benefit and Universal Credit – which are rising by 1.7 percent.
Steven Cameron, Pensions Director at Aegon commented: “The government’s commitment to maintaining the state pension triple lock will offer some good news in a difficult climate for state pensioners as they will receive a bumper increase in state pension payments from next week.
“Under the triple lock, the state pension has been rising at the highest of earnings inflation, price inflation or 2.5 percent a year.
“This year, the state pension will be uprated against earnings growth of 3.9 percent, the highest of these benchmarks and over double the rise in inflation-linked benefits and tax credits.
“This means that those who reached state pension age after April 6, 2016, and are entitled to the full new state pension, will see their weekly payments rise next week from £168.60 to £175.20.
“Those who reached state pension age before then, and are receiving the full basic state pension, will see payments rise from £129.20 to £134.25.
“Some in this group will also be receiving a state earnings related pension.
“At the present time, with many people including pensioners facing financial difficulties to cover their basic expenses, any extra however little helps and this inflation-busting increase offers state pensioners some much needed good news.”
However, some people will not see their state pension be uprated under this mechanism.
This is because the state pension will only increase each year if you live in:
- The European Economic Area (EEA)
- Countries that have a social security agreement with the UK (but individuals cannot get increases in Canada or New Zealand).
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Should a person live outside of these countires, they cannot get yearly increases to the UK state pension.
If they return to live in the UK, then Gov.uk explains the pension would go up to the current rate.
The state pension is usually paid every four weeks into an account of the recipient’s choice.
It is paid in arrears, meaning the payment covers the last four weeks, rather than the upcoming four weeks.
Universal Credit is also increasing by 1.7 percent in line with inflation from Monday, April 6.
The increase comes following the planned end of the four-year benefits freeze.
The rates for working-age benefits including this payment have not risen since April 2015.
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