Since 2010 the state pension has been increased each year by the higher of:
• Inflation, as measured by the Consumer Prices Index (CPI)
• The average wage increase
• Or 2.5%
This is known as the triple lock.
During the Covid pandemic, many people were earning less than usual because they were placed on furlough. However, as people gradually came off furlough and returned to normal full pay this caused an artificial boost in wages, which would have resulted in a 8.3% rise in the state pension next year. The Government said that to stop pensioners from “unfairly benefitting from a statistical anomaly” it had decided to suspend the triple lock for the 2022/23 tax year by removing the average wages link, although it would be reinstated in the following year and for the remainder of this Parliament.
The increase in the cost of living, as measured by the Consumer Prices Index, fell to 3.1% in the year to September, down from 3.2% in August. Therefore, assuming a full National Insurance contribution record, the basic state pension will increase by 3.1% in April 2022 from £137.60 pw to £141.85 pw whilst the flat-rate state pension will rise from £179.60 pw to £185.15 pw.
BBC Pension Scheme increases are based on the increase in the Retail Prices Index (RPI) at December each year with the increase paid the following April. The September RPI figure is 4.9% and it is expected to increase in December to around 6%. However, there is a cap on the maximum guaranteed increase that will be paid. The increase for Old Benefits members is capped at 10%, for New Benefits members it is 5% and for Career Average Benefits members it is 2.5%.
