Britons will have to weather several financial changes in 2022, as the chancellor attempts to rebalance Government purses. They will have to foot a larger bill for National Insurance and dividend tax, with the former policy designed to support social care. But while everyone must deal with these changes, the Government has provided State Pensioners with some protection.
The Triple Lock
Last year, Mr Sunak announced a raft of changes working Britons would have to shoulder in 2022, most notably surrounding the ‘triple lock’ agreement.
The agreement, introduced for pension plans in 2010, guarantees that rates grow each year in line with average earnings or prices measured by the Consumer Prices Index (CPI), or 2.5 percent if neither reaches this amount.
Conservatives broke a manifesto promise last year when they revealed they would suspend the policy for the 2022 to 2023 tax year.
Instead, a ‘double lock’ will keep pensions growing, but likely at a reduced rate.
The Government’s sticking plaster remedy will disregard the CPI portion of its predecessor, meaning pensions will either grow with inflation or 2.5 percent.
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The double lock means the Government won’t have to raise state pension by eight percent, as they might have with the CPI aspect included.
But they will still increase state pension as inflation has risen at a gentler rate.
The latest estimations from September 2021 had inflation at 3.1 percent, meaning people relying on State Pension will have another £290 per year in their pocket from the coming April.
Inflation will mean their annual payment rises from £9,339 to around £9,628.
Per week, the changes work out to approximately £185.15, up from £179.60.
A new age for pensions
Potential changes to the State Pension age could mean some people get theirs sooner than planned.
The Government will review the state pension age this year to see if present plans are appropriate.
The current retirement age is 66 and will increase to 67 by 2028.
Ministers may end up fighting pressure to postpone this change for another two decades.
A study published by consultant LCP found that improvements to life expectancy had failed to materialise, in a trend that started before the pandemic.
It suggested MPs postpone their current policy by another 23 years to 2051.
A double whammy for over-23s
One of the few benefits for younger workers this year comes with the other changes in April when the national living wage rises.
By then, wages will receive a 6.6 percent boost to £9.40 per hour from the current rate of £8.91.
Workplace contributions will also rise in kind, from £798 per year to £884.
The additional £86 will bulk up their pensions, compounded by investments, Steven Cameron, pensions director at Aegon, told the i paper.