New analysis has revealed that the poorest pensioners will see the lowest rise their pension income next year.
According to Royal London, the benefit that pensioners are on – pension credit – will see a rise of just 2.3%, equating to an increase of just £3.65.
However, this is less than the growth that new applicants of the state pension will see, with the rate rising by £4.80 to £164.35.
The difference in growth is down to the triple lock, which the state pension is protected by. Pension credit, on the other hand, is only legally required to increase in line with average earnings growth.
Usually, this difference would be offset by the Government, say Royal London, with money being used from within the benefits system. However, the insurer stated that this has not occurred this year, hence the disparity.
Commenting on this difference was Steve Webb. The Director of Policy at Royal London stated: “It is surprising that the government has decided to give the poorest pensioners the smallest increase. For those on pension credit, the rise is below the rate of inflation which will create a squeeze on the living standards of the poorest pensioners. By contrast, better off pensioners will get a full inflation-linked increase. For many years pensioner poverty has been falling and it would be worrying if that progress were to be reversed because of decisions like this.”
