Britain is currently dealing with an increase in the cost of living, which is partially caused by both soaring inflation and a sharp jump in energy prices. While everyone is affected by this, pensioners and those on low income who get the minimum wage are more likely to be affected. Many older people primarily rely on their state pension pot to get by in later life but this may not be enough despite the most recent payment rise.
The minimum wage for those over 23 years of age is otherwise known as the National Living Wage.
Currently, this minimum wage is £9.50 per hour which is the equivalent of £19,760 salary for a worker on shift 40 hours per week.
As part of the Government’s commitment to address the cost of living crisis, the National Living Wage will be raised to £10.42 an hour for workers.
An individual on the new minimum wage for 2023 would be on a salary of £21,673.60 if they worked 40 hours per week.
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With the return of the triple lock next year, the full new state pension payments will increase to a high of £203.85 a week.
This is in line with the Consumer Price Index (CPI) rate of inflation for September and would see a pensioner get £10,600.20 a year, provided they get the full amount.
Currently, the new state pension is £185.15 a week which comes to £9,628 a year and the basic state pension is £141.85 a week, amounting to £7,376.20 over a year.
None of these annual amounts are able to exceed the minimum wage which is the lowest a worker over 23 can get in the UK.
Experts are sounding the alarm that pensioners are at risk of being significantly financially disadvantaged as a result.
Speaking exclusively to Express.co.uk, Zoe Stabler, an investment expert at finder.com, broke down why the state pension is going up next year.
She explained: “It was confirmed in the Autumn Budget that the triple lock guarantee would be reinstated, which guarantees that the state pension will rise by the highest of inflation, average earnings growth or 2.5 percent each year.
“The inclusion of average earnings growth was suspended in the 2022-2023 tax year, but has been fully reinstated, meaning that the state pension will be rising by 10.1 percent in April 2023.
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“This means that those qualifying for the full state pension will get a total of £203.85 per week, pocketing them an additional £75 each month and more than £950 per year.
“In addition, the standard minimum guarantee for Pension Credit will be increased by 10.1 percent.”
The finance expert noted that those approaching state pension age may have to make additional arrangements when it comes to their income in retirement.
Ms Stabler added: “While this is a significant increase in payments, it still offers a smaller annual income than a worker on minimum wage.
“Those planning on retiring soon should check how much state pension they’re entitled to on the gov.uk website.
“Those that don’t qualify for the full amount may want to consider checking with a financial adviser whether they may be able to increase this by making additional National Insurance contributions.
“Anyone planning for retirement, no matter their age, should view the state pension as one part of a wider retirement plan.
“It’s worthwhile to make use of employer pension schemes, personal pensions and individual savings accounts (ISAs) or lifetime ISAs to save up for retirement.”
The upcoming increase to state pension payments, alongside other DWP benefits, will be implemented from April 2023.