Finance: Expert gives advice on getting the most out of pension
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The Liberal Democrats are this week launching a bid to ensure pensioners are not crippled by financial difficulties next year. The cost of living crisis currently engulfing the UK is set to completely wipe out the planned rise in pension payments.
The state pension is due to rise by 3.1 percent from April 2022.
It represents a £4.25 a week increase for the Basic State Pension, or a £5.55 increase for the New State Pension.
However, new research from the House of Commons Library research commissioned by the Liberal Democrats warns inflation will be as much as double that come April.
At the same time, the increase in the cost of gas means the energy cap increased by £139 at the start of this month and could increase by a further £300 come next spring.
The analysis warns in real terms, the Basic State Pension would be slashed by £4.00 a week, or £208 a year.
Meanwhile, the New State Pension would be cut by £5.25 a week, or £273 a year.
Liberal Democrat Work and Pensions spokeswoman Wendy Chamberlain MP said: “The Conservatives have broken their manifesto promise to protect the state pension and are failing to tackle the cost of living crisis.
“This is striking a double blow to pensioners, who face being left hundreds of pounds poorer as their pension payments fail to keep up with soaring bills.
“The Liberal Democrats are demanding a fair increase to the state pension, so that it matches rising living costs instead of leaving pensioners out in the cold.
“We know that pensioners are typically more vulnerable to increased energy bills, as they tend to spend more time at home especially in the winter months.
“Older people deserve a fair deal in which their pensions are protected and they can afford to keep their homes warm.”
The party is this week tabling an amendment to the Social Security Bill to push for a change to the way the state pension is calculated for 2022.
They want to ensure that the rise is taken from the up-to-date inflation figure for April 2022 rather than from September of this year.
They say the alteration would mean state pensions would continue to rise in line with the increased hike expected in energy bills when the price cap changes.
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The Lords will debate the Social Security Bill on Tuesday.
Under legislation first introduced by the coalition Government, pensions are due to rise each year by the highest of inflation, average earnings, or 2.5 percent.
However, ministers said there was a need to suspend the mechanism for 2022-23 because the pandemic had led to a “statistical anomaly”.
Average earnings are set to rise by as much as nine percent due to millions of people returning to work after being supported by the furlough scheme.
Legislation was changed to remove the earnings element of the lock for the next financial year.
Ministers promised the original method used to calculate state pension increases would return next year.
The Conservatives pledged to stick by the triple lock in their 2019 general election manifesto.
The Department for Work and Pensions was contacted for comment.
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