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Inflation figures - how will this affect the pension landscape?

ended 16. October 2024

This request has come in from a Daily Express journalist: 

With the inflation figures tomorrow, which will determine benefits increases and Pension Credit:

- How could this affect the pensions landscape?
- How could the state pension be affected?
- What should people do to prepare for the winter months when bills are higher?

2 responses from the Newspage community

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Editor
Anita Wright
Independent Financial Adviser at Ribble Wealth Management
The headline inflation rate in August was 3.1%, and with UK inflation expected to drop below the 2% target for the first time since April 2021, there are significant implications for the pensions landscape.
If CPI inflation rate is 2% in September, under the triple lock, the state pension would increase by the highest of the three measures: 2.5%, CPI inflation (2%), or average earnings growth.
This could result in more modest increases for pensions, including the state pension, affecting the income of pensioners. As Pension Credit is directly tied to inflation, recipients may see smaller benefit increases, impacting their overall income. With winter approaching and energy bills typically rising, it is important for individuals, particularly pensioners, to reassess their financial plans. Preparing for potentially smaller pension increases while anticipating higher living costs could help mitigate financial strain during the colder months.
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Prem Raja
Head of Trading Floor at Currencies 4 You
Tomorrow's CPI data will affect pensions, as we expect inflation to fall below the BoE's 2% target for the first time in a long time. This CPI number is mostly because energy prices have been lower through the Summer, and the general expectation is that we will see inflation rise again through October and November. Generally, the increases in pensions under the triple lock will now be more limited compared to the increases we had seen over the last couple of years when inflation was rising at a faster pace, this will mean pensioners' incomes will be affected and will mean they will have to plan their finances more to ensure they are mitigated from rising living costs through the winter.