Just 38p a day rise next year for pensioners

Wednesday, 17 October 2012

Britain's state pensioners will receive an increase of just 38p a day next year, experts have warned.

The £2.69 weekly increase from April will be triggered under new rules linking pensions to the previous September's inflation figure.

This has fallen to its lowest rate for almost three years.

Pensioners are already facing a severe squeeze on their finances and they are set to feel an even bigger pinch thanks to soaring energy bills.

Some of Britain's biggest energy giants have revealed plans to increase their prices, with the average dual bill set to rise to £1,300 a year.

Food prices are also rising - and are expected to rise even further - forcing many older people to make drastic cutbacks.

Dot Gibson, general secretary of the National Pensioners Convention, said: "It will only add to the hardship that millions of Britain’s pensioners already face.

"They have to cope with one of the least adequate State pensions in Europe. It is time we had a pension system that took all older people out of poverty."

Under Government rules, the increase in State pension in April is dictated by the inflation rate from the previous September.

Figures published by the Office for National Statistics show the consumer price index measure of inflation fell to 2.2 per cent last month.

Under the Coalition's 'triple lock' system, the annual increase is linked to earnings, inflation or 2.5 per cent - whichever is highest.

This year, a 2.5 per cent increase is expected, although this will not be officially confirmed until the Chancellor's Autumn Statement in December.

The rule was introduced to protect pensioners from increases such as the infamous 75p a week rise in 2000, which provoked outrage.

In April, the State pension rose by £5,30 to £107.45, the biggest increase since it was introduced in 1908.

A Department for Work and Pensions spokesman said: "Decisions on uprating will be announced later this year."

Vince Smith Hughes, a retirement expert at insurance firm Prudential, said: "Pensioners typically spend a higher proportion of their income on fuel and other essentials.

"This can result in inflation costing pensioners around £1,000 per year more than the rest of the population."

The Department for Work and Pensions has said that the basic State pension will cost around £63billion this year.

Official figures revealed last month that the bill would double over the next 20 years.

By 2032/33, the cost will be £121billion and the number of recipients will rise from 13million today to 15.6million.

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