Why retired couples will be £700 worse off next year

RETIRED couples will be nearly £700 poorer next year – even after a state pension pay rise to match inflation.

Inflation figures published yesterday mean the state pension will rise by 3.1 per cent from April, handing pensioners at least an extra £4.25 a week.

But rising energy costs and food prices mean that a retired couple will face extra costs of at least £22 a week next year, according the Centre for Economics and Business Research. So while an elderly couple can expect £442 more a year, they are facing extra costs of £1,130.

It comes after the Government abandoned its ‘triple-lock’ promise to increase pension pay every year to match the highest of average earnings, inflation or 2.5 per cent because the pandemic distorted wage figures to show earnings rose by more than 8 per cent.

September’s inflation figure is used to determine the annual pension pay rise. It means a retiree receiving the old basic state pension will see their income rise by £4.25 from £137.60 to £141.85 a week – up to £7,376.20 from £7,155.20 a year.

Meanwhile, a pensioner collecting the new state pension can expect a rise of £5.55, increasing from £179.60 a week to £185.15 – or from £9,339 to £9,628 a year.

Yet Alistair McQueen, head of savings and retirement at Aviva, said last month’s inflation measure was ‘a backward looking measure’ that ignored soaring energy and food costs.

The Liberal Democrats want to see next April’s inflation figure used to calculate the rise instead, as this would take into account rising energy prices.