Millions of pensioners face a £169 blow to their incomes next year as the government is set to reject calls from the House of Lords for a bigger pension rise despite inflation already nearing a decade-high four per cent. Around 12.4 million recipients will receive a 3.1 per cent increase in the state pension to £185.15 in April based on September’s inflation data.
The Centre for Economics and Business Research (CEBR) estimated this will leave pensioners £169 worse off. The figures are based on the Bank’s latest projections showing inflation at 3.4 per cent by the end of next year. CEBR economist Sam Miley warned that “mounting inflationary pressures will erode pensioners’ real incomes.”
He said, “Pensioners will be particularly vulnerable to rising prices, due to the fact that their disposable incomes tend to be lower in the first place. Meanwhile, the nature of inflation at present, being heavily concentrated in utility prices, is also set to adversely affect pensioners, given that this makes up a relatively larger proportion of their overall spending.”
Charity director at Age UK, Caroline Abrahams said the organization was “extremely concerned” about rising prices. She was quoted in a report as saying, “The state pension, the main source of income for most older people, is less than £9,000 per year on average – hardly a fortune in anyone’s terms. If the Government overturns the amendment, then the responsibility of Ministers to come up with a package of measures to protect the health and welfare of pensioners on low incomes this winter will be all the greater.”
General secretary of the National Pensioners Convention, Jan Shortt added that rejecting the amendment would be “shameful”. She said, “The electorate will remember when it comes to the ballot box.”