Triple Lock Suspended But Pensions Will Still Rise | moneyfacts.co.uk

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Derin Clark

Derin Clark

Online Reporter
Published: 07/09/2021

Today the Government announced that the triple lock will be suspended for one year, however state pension will still rise next year by 2.5% or in line with inflation.

Making an announcement in the House of Commons Work and Pensions Secretary Therese Coffey, announced that a Social Security Uprating and Benefits Bill would be introduced for 2022-23 which will result in the basic and new state pensions increasing by 2.5% or in line with inflation.

The announcement of the new Bill means that the triple lock - which sees the state pension rising by either inflation, average earning growth between May and July, or by 2.5% - being suspended for one year. Due to the post-pandemic rise in average wages, if the triple lock had been kept this year it would have seen the state pension increasing by 8%.

1.25% tax increase announced

The suspension of the triple lock comes on the same day that Prime Minister Boris Johnson announced that a new health and social care tax will be introduced to pay towards funding social care and the NHS.

The tax will start from April 2022 with a 1.25 percentage point increase in National Insurance (NI) paid by both employers and employees. From 2023 it will become a separate tax on earned income which will be calculated in the same way as NI.

In addition to this, income from share dividends will also see a 1.25% tax increase.

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